Direct lending funds alone closed last year raising more than $50bn.
Private debt assets under management soared to an all time high in 2017, according to data provider Preqin.
Private debt fundraising surpassed $100bn in aggregate capital raised by funds closed in 2017, doing so for the first time after close calls in 2008, 2015 and 2016.
Direct lending funds alone closed the year with more than $50bn in committed capital across 61 funds, double the total for 2016 ($24bn). The average fund size also more than doubled for direct lending funds closed in 2017 to $1bn compared to $478m in 2016.
North America-focused funds once again enjoyed the highest fundraising totals, Europe-based investors account for 24 per cenr of those active in private debt, while North America is home to 57 per cent of institutional investors. As at January 2018, there are 335 private debt funds in market seeking $149bn across all private credit strategies, including one $10bn vehicle from Goldman Sachs.
The first half of 2017 alone recorded a further $71bn in capital being returned, raising the prospect of the industry distributing more than $100bn through the year for the first time.
Distributions have been driven by strong performance: private debt funds returned 18.4 per cent in the year to June 2017, and an annualized rate of 10.9 per cent in the five years to that point.
The private debt industry has tripled in size since the end of 2007, reaching $638bn in assets as of the end of June 2017.
The asset class has shown a consistent pattern of growth in assets, despite increased capital distributions to investors in recent years.
This pattern looks set to continue into 2018: 42 per cent of investors say they intend to commit more to private debt in the year ahead than they did in the 12 months prior.
However, recent influxes of capital have driven dry powder to record highs, and seven out of 10 fund managers report that there is more competition for transactions compared to 12 months ago.
Ryan Flanders, Head of Private Debt Products said funds have seen strong performance, and fund managers have been able to both put capital to work and return capital to investors at greater levels than ever before.
“This has stoked investor confidence, and many have looked to reallocate capital to the asset class in ever-increasing quantities, spurring record fundraising levels,” he said.
Join AltFi for its third annual Alternative Income Forum, exploring closed-ended funds (investment trusts) specialising in generating an income using alternative assets such as specialist finance, P2P lending, direct lending, asset leasing and more. Hear from the leading investors and fund managers in this rapidly growing market.