Fundraising gains momentum in second quarter

Capital raising for private debt is at a low level compared with previous years but, after a very slow start in the first quarter, the last few months have seen a pick-up.

Fundraising for private debt funds globally in the first half of the year stood at $60.4 billion, according to preliminary figures from our database. After six months, this is only a third of the total raised last year ($180.1 billion).

The first quarter was very subdued, with just $24.9 billion raised. This was only partly attributable to the pandemic, which only had a significant effect towards the end of that quarter – the low number also came on the back of dwindling fundraising during 2019.

However, the second quarter offered a glimmer of optimism with $35.5 billion raised as fund managers began adjusting to the new environment. Many came to market with vehicles designed to take advantage of dislocation, such as the $2.8 billion KKR Dislocation Opportunities Fund.

The largest vehicle to close in the first half of the year was GSO Capital Partners’ $4.6 billion European Senior Debt Fund II. This was followed by the $3.5 billion Ares Special Opportunities Fund and the $3.4 billion Ardian Private Debt Fund IV.

Europe has been a greater focus for fundraising activity in 2020 than is typically the case, accounting for $19.3 billion of the total in H1. North America, normally the leading region, saw just $16.7 billion raised. Multi-regional funds were the most attractive to investors, with $21.8 billion raised.

In recent years, global private debt fundraising has fairly consistently hovered around $170 billion-$180 billion on an annual basis. The outlier year was 2017 when, with many new investors coming to the asset class and direct lending all the rage, $256.1 billion was hauled in.