Chart of the Week: Demand for private debt is rising

Global and North America-focused debt funds are increasingly popular among LPs 

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Corporate debt fundraising reached a five year high in 2013, when $68.07 billion was raised by the 94 funds that held a final close in the year. There was a 53 percent global increase in the amount of total capital raised by debt fund managers in 2013 compared to 2012.

 

$54.35 billion was raised for global and North America-focused debt funds in 2013 – more than was raised in total for debt-related strategies in 2012. EIG Energy Fund XVI, Lone Star Fund VIII and GSO Capital Solutions Fund II were the three largest debt funds to close in 2013 with a combined total of $16.15 billion.

 

In 2013, the proportion of total capital raised for European investments decreased by almost 50 percent year-on-year.  The top three Europe-focused debt funds – ICG Europe Fund V, HayFin Special Opportunities Credit Fund and EQT Credit Fund II – together collected $6.38 billion compared to the largest three debt funds in 2012 which collected $8.98 billion. One reason for this drop may be that the market has become too saturated and too much capital was raised in 2012 in relation to the number of opportunities available. Investors may also fear that the sovereign debt crisis in the Eurozone will continue to have a major impact on the private debt market and have been reluctant to invest in the region.