While North America and Europe have traditionally attracted the largest proportion of private debt capital, funds targeting Asia & Rest of World have still raised substantial capital. Significantly, data from Preqin’s Private Debt Online service suggests an increase in fundraising momentum in this region and an upward trend regarding the overall proportion of capital that Asia & Rest of World-focused funds are attracting.
The chart below presents a breakdown of annual private debt fundraising by primary geographic focus between 2010 and 2015 so far. Overall, 14 funds targeting Asia & Rest of World closed in 2014, having raised just under $6bn. To date, 10 funds targeting this region have held a final close in 2015, having raised a total of just under $5bn. As 2015 moves into its third quarter, with 33 private debt funds currently in market targeting this region, constituting 13% of all private debt funds currently in market, the amount of capital raised by such vehicles this year looks set to significantly surpass the amount raised last year. This indicates a substantial increase in private debt fundraising activity in these regions and renewed investor interest.
The chart places this growth within the context of fundraising activity in the region over the past five years, and in doing so it indicates the relative volatility of this market. The youth of the private debt asset class in Asia & Rest of World compared with North America and Europe, differing legal and economic frameworks and local demand are all factors that help to explain this volatility. The same important challenges remain for fund managers looking to raise private debt capital to invest in Asia & Rest of World.
However, fundraising data for 2015 does suggest a significant surge in the demand for private debt capital throughout Asia & Rest of World. In conjunction with the growing maturity of alternative forms of lending throughout these markets, this apparent change suggests that this may well be an event with long-term ramifications for the private debt universe. The scale of this surge certainly suggests that this is an area of growth to watch. With events in Europe provoking uncertainty and ongoing concern for the strength of the US economy for some, it would appear that many fund managers and investors are paying greater attention to potential opportunities in Asia & Rest of World.