Private credit fundraising slowed in Q1

The pace of private debt fundraising slowed in the first quarter of the year, but experts believe that this slowdown may be temporary.

A new report on private debt by Preqin found that, despite the quarterly slowdown, annual figures show that fundraising is on the rise. In 2023, private debt fundraising was $202.5bn (£161.79), or 91.5 per cent of the capital raised in 2022.

Preqin also reported that fund managers were targeting aggregate capital of $487.3bn on 31 March 2024, a rise of 54 per cent since 1 January 2023.

Read more: Private credit to “thrive” as dry powder reaches $292bn

“Looking ahead, private debt still offers a robust profile in the current market where interest rates remain high,” said RJ Joshua, vice president, head of private debt and fees, research insights, at Preqin.

“This may especially be the case if the market continues to walk back rate cut expectations, or even moves to expecting Fed rate hikes, which may increase opportunities for private debt funds on a relative basis as they tend to be floating rate.”

Read more: Fitch: Competition in private debt is intensifying

The Preqin report also found that 90 per cent of investors said private debt had met or exceeded their expectations, while 92 per cent expect the same or better performance for private debt this year compared with last year.

Investors told Preqin that their top two concerns for private debt were interest rates and inflation, reflecting the unstable macro-economic environment which prevailed at the start of the year.

North America has seen the most fundraising activity, with $14.6bn raised in aggregate capital during the first quarter of this year. Europe was a close second with $14.4bn raised during the same period.

Read more: Institutions shift portfolios towards private credit