Chart of the week: European vs North American private debt strategies since 2014

The European market is dominated by senior debt strategies, while North American investments are in favour of mezzanine debt.  

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We broke down the private debt fundraising for 2014 and H1 2015 on the European and North American markets to compare major strategies between the two developed regions. Despite a similar structure where senior and mezzanine debt make up the majority of fund strategies – 88 percent for Europe and 80 percent for North America – we found interesting points of divergence.

Europe illustrates a radical preference for senior debt with the strategy representing 57.4 percent of the total amount raised since 2014. Six European senior debt vehicles of sizes ranging between $1 billion and $3.3 billion were raised over the period. Ares Management notably raised a total of $4.6 billion for European investments across two funds.

On the other hand, the North American market is less radical and leans in the opposite direction, with no one strategy taking a majority of the capital raised. There was, however, a defined preference for mezzanine debt which totaled $15.1 billion. Four North-American subordinated debt vehicles with sizes above $1 billion each were closed in 2014 and 2015 to date. The biggest fund manager in terms of amount raised over the period 2014-H1 2015 is Apollo Global Management with a total of $3.8 billion.

The skewer distribution of European strategies is further illustrated with the allocation to the distressed debt category being significantly smaller than its American counterpart, although it is a minority strategy for both regions. The biggest distressed fund raised was Kildare European Partners I, which closed in May 2014 at $2 billion, but the North-American market collected a total of $6.4 billion compare to only $3.8 billion for Europe. The most recent distressed debt fund is Ares Special Situations Fund IV, which closed in April 2015 and targets the North American market.