Why has distressed fundraising boomed?

Distressed debt fundraising has fallen back, but 2017 saw unprecedented activity.

In the first six months of 2018 we saw $20.2 billion raised by 11 distressed debt funds holding a final close. This is just 40 percent of the total raised for the same period last year. H1 2017’s fundraising total was always going to be hard to match.

Even if you discount the $24.7 billion raised by Apollo’s flagship Investment Fund IX, of which 25 percent is earmarked for distressed debt, H1 2017 is still the busiest six months for distressed fundraising.

Some investors are preparing themselves for a turn in the economic cycle by moving away from riskier strategies. Others are actively seeking out distressed debt opportunities.

As always, the cycle is hard to predict, however, there are early signs, particularly in the retail sector, that there could be a wealth of distressed debt deals in the future.