More private debt funds in market than ever

The top 20 funds are aiming to raise $93bn between them as the total amount of targeted capital passes $270bn.

During the first half of 2017, there were a record 528 private debt funds in the market seeking to raise $270.4 billion, according to PDI data.

This compares with 475 funds seeking $266.6 billion in the first half of 2016 and 403 funds aiming to raise $203.8 billion in the first half of 2015.

The top 20 funds in the market are trying to raise a collective $92.8 billion. Apollo Investment Fund IX (which targets both debt and equity) is the largest fund currently raising, with a target of $23.5 billion.

Oaktree Opportunities Fund Xb is the second-largest with a $7.0 billion target, and GSO Capital Solutions Fund III comes next with its sights set on $6.5 billion. Centerbridge Special Credit Partners III and MCPP Infrastructure are both targeting $5.0 billion.

But while aspiration to raise capital has risen to a new peak, many market observers predict that the benign cycle for debt investment seen since the financial crisis cannot last much longer. There is also talk of hot competition, based only on capital already raised.

“The abundance of liquidity has driven performance very much down,” said Agnes Mazurek, a managing director at MIDIS, the infrastructure debt arm of Macquarie Group, at our recent Germany Forum in Munich.

“It’s not just pricing but structure terms. It might be worth taking a pause and asking how much more aggressive is this going to go,” she added.

Of the near-$300 billion currently being sought, almost 40 percent is for global strategies (targeting two or more regions), while North America is the target for 32 percent of the total and Europe 22 percent.

The largest regionally focused fund being raised is Macquarie Infrastructure Partners IV, which is seeking $4.0 billion for investment into North America.