First-half private debt fundraising near record

Total capital raised globally by private debt funds reached $61.6 billion in the first half of this year, according to provisional figures from sister publication Private Debt Investor data*.

This made the first half of 2017 the second-most prolific first six months of any year on record, beaten only by the amount raised in the first half of 2015, which saw $65.9 billion of capital raised.

Based on historic precedent, more capital has typically been raised in the second half of the year than the first. This means 2017 appears to have a decent chance of setting a new record for private debt fundraising, given that the highest annual total so far was the $130 billion closed in 2013.

In common with the pattern seen in previous years, North America remains the most popular geographical focus for funds raised in the first half, accounting for 59 percent of the total. 

Western Europe is the target for 20 percent, the whole of Europe 19 percent, Asia Pacific one percent and the Middle East and Africa less than one percent. 

The largest private debt fund closing in the first half was Alcentra's $4.9 billion Clareant Europe Direct Lending Fund II, followed by Crescent Capital Group's $4.6 billion Mezzanine Partners Fund VII and Hayfin Capital Management's $4.1 billion Hayfin Direct Lending Fund II. 

Funds currently in market include Apollo Global Management's Apollo Investment Fund IX (covering both debt and equity), Oaktree Capital Management's Oaktree Opportunities Fund Xb and Blackstone's GSO Capital Solutions Fund III, which have targets of $23.5 billion, $7 billion and $6.5 billion respectively. 

The size of these funds suggests that private debt fundraising – which has risen markedly since the $47 billion that was raised in 2010 – could be set to take another significant upward jump in the period ahead.

With investors being increasingly drawn to the top of the capital stack to try and alleviate risk as the cycle matures, it is unsurprising that senior debt was the most popular strategy in the first half of 2017, laying claim to 38 percent of capital raised. 

However, the appetite for higher risk/return has far from diminished with subordinated/mezzanine accounting for 26 percent and distressed debt 25 percent.

*Current figures are provisional, ahead of our Q2 2017 fundraising report to be published by the end of this month.