A vote of confidence from LPs

Our latest LP Perspectives survey found that more than a third of investors plan to increase allocations to private debt.

The future for private debt fundraising also looks bright, according to results of the PDI LP Perspectives 2023 survey. While 18 percent of LPs said they were currently overallocated to the asset class, 34 percent are under-allocated indicating there is still an overall appetite to grow private debt allocations in the future.

The same study found 38 percent of LPs plan to invest more capital in private debt in the next 12 months compared to the previous 12 months, with just 11 percent intending to invest less.

When it comes to strategy selection, direct lending continues to be by far the most popular type of fund for LPs with almost half expecting to increase their direct lending investments over the next year. 

Distressed and special situations are also popular given current economic conditions, with 29 percent looking to grow their investments in that strategy, though 24 percent of LPs will be investing less, perhaps reflecting that the bulk of the opportunity for distressed investing may have already passed. Among the smaller strategies that make up the asset class, speciality finance is proving popular, with 49 percent planning to invest the same amount and 18 percent looking to commit more while just 6 percent will look to reduce their commitments.