Private debt fundraising slumped in 2024
Private debt fundraising ended 2024 at a lower level than each of the previous four years, with 153 funds holding a final close for an aggregate value of $196.1bn (£152.8bn).
According to new data from PitchBook, private debt fundraising is on track to finish approximately 10 to 15 per cent behind 2023’s total of $245.9bn raised.
PitchBook’s 2024 Annual Global Private Market Fundraising Report found that overall private market fundraising also saw a slight decline in 2024, with approximately $1.37bn raised – down from $1.41bn in 2023.
However, despite the lacklustre fundraising performance, PitchBook analysts said that 2025 could be a “turnaround year” for private markets as private equity has recently demonstrated an uptick in exits, while investor demand for private debt remains strong.
“Private debt returns have outpaced all other private market asset classes over the past year, through the second quarter of 2024,” said Kyle Walters, analyst, US private equity, at Pitchbook.
“As a result, the asset class had seen robust inflows as investors looked to capitalise on exposure to floating-rate debt benefiting from higher interest rates.
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“However, the back half of 2024 was a different story, as the lower expectations for the asset class, given the less favourable interest-rate backdrop, made the strategy less attractive.
“Despite the more gradual rate cuts from central banks, investor demand for new funds fell short. Lower rates have triggered a flight from floating rate securities and loans in prior cycles.”
Walters noted that other strategies, including private equity and real assets, provided outsized returns on a one-year basis, leaving private debt’s relative attractiveness in question. Headlining the funds that helped buoy the asset class’s fundraising throughout the year was Ares’ Senior Direct Lending Fund III, which raised $15.3bn in capital.
PitchBook also highlighted notable fund launches from the likes of HPS Investment Partners, which closed its Specialty Loan Fund VI on $14.3bn in June, and ICG, which closed its Senior Debt Partners Fund 5 on $17bn in September.
PitchBook found that megafunds of more than $5bn also dominated private equity fundraising efforts, accounting for almost half of the capital raised in 2024. However, mid-sized and smaller funds have struggled, as LPs prioritised experienced managers with proven track records over emerging players.
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Private, closed-end real estate funds had a “lethargic” fundraising year in 2024, PitchBook added. 156 vehicles closing on just $65.3bn over the course of the year.
Separate research from Morningstar also highlighted a number of shifts in the European asset management landscape. Morningstar found that while private equity now accounts for 39 per cent of private markets, private credit is gaining traction as stricter banking regulations limit traditional lending, creating demand for alternative financing solutions for growth companies and non-standard cases.
The Morningstar report also noted that the rise of European megafunds is creating a concentrated power dynamic.
“The dynamics within Europe’s asset management industry are undergoing a profound shift,” said Johann Scholtz, senior equity analyst at Morningstar.
“An increasing focus on private markets, coupled with the rising dominance of megafunds and the urgency to address pension shortfalls, creates opportunities for firms to strengthen their competitive positioning.
“Forward-looking players who act now are well-placed to capture untapped growth.”
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