New record for private debt industry

New record for private debt industry

New record for private debt industry

The private debt industry saw further expansion in 2017, with assets under management up 13% to U$667 billion by the end of the year.

Dry powder held by funds was up 18% to $246 billion while the total value of unrealized assets gained 10% to $421 billion.

Industry analysts Preqin say the size of the private debt industry has tripled in the past decade (from $204 billion in 2007) with year-over-year growth every year since 2000.

Although over half (51%) of investors surveyed at the end of 2017 have a positive perception of the industry, this was a decrease from 60% that felt positive when surveyed in 2016.

Direct lending shows notable rise
Direct lending saw a notable increase of $47bn in total assets, and except for mezzanine funds which saw no change, AUM for all fund types increased from 2016 to 2017.

“The growth in direct lending assets was a significant contributor to total industry growth – it is the fastest-growing part of the industry, and now controls assets on a similar scale with distressed debt,” said Tom Carr, Head of Private Debt Products. “It is also significant that even well-established fund types have seen increases in recent years, illustrating how much private debt is a growing industry.”

Private debt assets have grown despite capital calls reaching year-over-year record highs from 2011 to 2017 ($121 billion in 2017).

“Although the net flow of capital to investors was only $10bn, 2017 marks the first year in which distributions exceeded $100bn and is significantly beyond the level of capital returned in any previous year. Given its prodigious rate of growth, we may well see private debt assets approach three-quarters of a trillion dollars in the next year or so,” added Carr.


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