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Predictions for the private equity market have been full of
doom and gloom this week. The Private
Equity International European mid-market roundtable forecast a
downturn, while Bain & Co suggested it was time for GPs to “stormproof”
portfolios, as reported by PEI.
In contrast, the private debt market appears to be going
from strength to strength. Private Debt
Investor’s Annual Review 2015 discusses the positive fundraising
environment for the asset class and the factors pushing investors towards
illiquid credit investment.
PEI’s Research & Analytics team have compared private
equity fundraising, not including mezzanine vehicles, to the corporate debt market.
Both markets followed a similar trend year-on-year, with
fundraising gathering pace until 2013 before falling in 2014.
However, last year, while the private equity market
collected $13.7 billion less than 2014 from funds closed, fundraising for
closed-ended corporate debt vehicles increased by $23.9 billion.
As the private debt market continues to expand, the
relationship between these two asset classes seems to be changing. As returns
for large buyout funds dry up against the backdrop of a strong private debt
market where there is still the potential for large returns, private equity
fund managers are increasingly competing for investor capital with those of
private debt vehicles.
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