Investors plan increased allocation to private debt

Private debt is looked on increasingly favourably by institutional investors, a study has revealed, as almost half of the participants state they will increase their allocation to the asset class.

It will be the music to the ears of many private debt fund managers: institutional investors are looking to increase their private debt allocations over the next 12 months, a study has confirmed.

Of those surveyed by the advisory firm Elian, 41 percent said they would increase the amount they invest in the asset class, with 15 percent stating the additional amount invested would be significant. Around a third said their investments would remain the same.

It is perhaps no surprise that the thirst for private debt continues unabated as almost three-quarters of those responding to the survey said that the returns generated from their investments “exceeded expectations”, according to the report, which attracted 88 respondents through an online poll.

And the future appears to look good for the market, as 41 percent of the investors surveyed said the outlook is positive for the asset class, while only 7 percent said the market would head in the opposite direction.

Charles Le Conru, head of private equity at Elian, said: “Complex strategies seen from traditional lenders following the financial crisis have continued to weigh heavily on business growth. As a result, there has been a significant increase in demand for forms of alternative lending, specifically as institutional investors come up against continuing low yields from mainstream fixed interest vehicles.”