Private debt returned 9.2pc over last 12 months

Private debt funds returned 9.2 per cent over the past year, only beaten by private equity among private capital asset classes, according to PitchBook data.

The latest quarterly private capital index found that private capital overall – encompassing private equity, venture capital, real estate, real assets, private debt, funds of funds and secondaries – returned 7.4 per cent over a one-year period.

Private equity returned 9.5 per cent, while the beleaguered real estate sector recorded a 4.6 per cent loss.

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The breakdown of private debt returns shows that mezzanine debt delivered the highest returns over the last year at 14.8 per cent.

Direct lending returned 11.5 per cent, and distressed debt performed least well at 5.3 per cent.

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Looking at returns over a longer period, PitchBook found that private debt yielded 8.3 per cent over five years and 7.8 per cent over 10 years. This compares to overall private capital’s returns of 13.6 per cent over five years and 12.6 per cent over 10 years.

“Private debt funds have had a recent run of strong performance according to our PitchBook Private Capital Indexes,” said Zane Carmean, PitchBook lead analyst for quantitative and funds research.

“With one-year returns of 9.2 per cent through March, private debt has kept pace with PE and secondaries funds, and perhaps more importantly has outperformed the strategy’s own five- and 10-year returns of 8.3 per cent and 7.8 per cent, respectively. Within sub-strategies, mezzanine and direct lending have posted double-digit returns over the same timeframe, the latter in particular being buoyed by higher base rates.”

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