According to Preqin’s historical fundraising data, as shown in the chart below, 2015 has already seen closed-end private debt vehicles surpass the amount of capital raised in the whole of 2014. $77.3bn has been raised so far this year by 110 funds, whereas 135 funds raised £75.7bn in 2014. This year has seen a higher concentration of capital across fewer funds, a trend that began to emerge in 2013 following a peak in the amount of capital raised and the number of funds closed. More capital raised by fewer funds could indicate a trend towards capital consolidation as we move into 2016. However, the asset class remains strong, with private debt increasingly favoured by institutional investors.
According to Preqin’s league tables, 2015 has seen the close of one of the largest private debt funds ever raised after just seven months in market; GS Mezzanine Partners VI closed on $8bn in February. Furthermore, we have seen the launch of a large fundraising effort from Oaktree Capital Management, seeking a combined total of $10bn for their Oaktree Opportunities Fund Xb and Oaktree Opportunities Fund X.
There has been a significant rise in the average size of private debt funds over the last four years. The average size of a private debt fund raised in 2015 was $765mn, an increase of 37% since 2010. This increase in the average fund size is a natural result of the growing inflows of capital into the private debt market.
Preqin data shows that the most preferred private debt fund type in 2015 has been US-focused direct lending funds. This year has seen the closure of 20 US-focused direct lending funds, accounting for half of all direct lending funds closed globally. Over a three-year period, direct lending strategies have accounted for the largest proportion of fund closures, a trend which has been maintained throughout 2015.
The continued inflows of capital into private debt over 2015 and large fundraising efforts provide strong evidence of manager and investor confidence in the asset class, which looks set to continue into 2016.