Chart of the Week: Private debt allocation is highest in Europe

Investors focusing on the continent devote an average of 8.56 percent of their capital to private debt

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Three Hills Capital Partners has held the final close on its pan-European private real estate debt fund, Three Hills Decalia. The vehicle exceeded its €150 million target, raising €200 million from European investors.

Analysis by PDI Research & Analytics shows that investors with a sole focus on funds targeting opportunities in Europe allocate more to private debt than those focusing on any other region. As a benchmark, funds with a region-agnostic remit – marked as global – allocate 7.6 percent to private debt investments. This makes the 8.56 percent allocation by Europe-focused LPs seem exceedingly high.

Investors committing to funds targeting only North American investments allocate 5.76 percent of their capital to private debt, on average. Manulife Financial has the highest allocation to North American private debt, with $29 billion earmarked for investments into the asset class.

Latin America, however, exceeds the global benchmark. The region has been plagued by credit issues and remains overleveraged, which provides significant opportunities for private debt investors.