Preqin: Private debt fervour is slowing down
Demand for private debt products is beginning to slow, according to the findings of Preqin’s latest alternative assets review.
The investment data company’s Alternatives in Europe 2024 report found that European private equity fundraising is on track for a record year, with €118bn (£99.26bn) raised during the first six months alone.
However, the expectation of falling rates in Europe, the UK and the US is already causing a deceleration in private debt fundraising.
During the first half of 2024, €14bn was raised for private debt solutions. By comparison, €103bn was raised cumulatively in 2022 and 2023.
Read more: Private debt AUM to hit $2.64tn by 2029
Preqin noted that during the first six months of the year, UK-based private debt funds raised €6.9bn, West Europe-based managers €5.3bn, and Nordic-based managers €1.7bn.
Preqin predicted that capital targeting Europe will see lower growth from the end of 2023 to 2029 compared with North America. However, the firm still sees the growth profile of Europe as containing greater certainty due to the region’s broader exposure to lower-risk asset classes such as private debt and infrastructure.
“The anticipated reduction in interest rates is a driver of both the acceleration of private equity and deceleration of private debt given their contrasting prospects in a looser monetary policy environment,” said Alex Murray, VP, head of real assets, research insights at Preqin.
Read more: Green shoots emerge in fundraising climate
“The fervour for private debt seen over recent years may be showing signs of slowing down in Europe, in line with market expectations for prompter rate cuts compared with North America.”
Preqin’s data analysis found that Europe’s share of alternatives AUM was almost €3.3tn, or 20.9 per cent of the global total, by the end of 2023. However, the firm expects Europe’s share of AUM to contract to 20 per cent by 2029 due to lower forecast performance and a slower pace of fundraising compared to North America.
Read more: Private debt investors eye asset-backed lending over the next year
