PDI 50: the top 10

This year's crème de la crème of the private debt fundraising world.


Fruit of labour: Big Apple firm is the cream of the crop

1. Goldman Sachs $43.2bn (2017: 9)

After two years languishing on the edges of the top 10 – taking the ninth and eighth positions in 2017 and 2016, respectively – Goldman Sachs has topped the ranking for the first time. The US investment bank has been a pioneer in the private debt space since its earliest days, taking third place in our inaugural ranking in 2013. It has remained in the top 10 ever since.

The growth of the bank’s private debt business has seen its five-year total nearly double over the past 12 months from $24.1 billion to $43.2 billion. This is largely down to the record $9.9 billion raised for GS Mezzanine Partners VII in December. The fund held a $3.8 million first close in September 2017 – just three months after launching – having received a commitment from pension fund Korea Post.

The firm also raised $3.16 billion for Broad Street Senior Credit Partners, a 2015-vintage fund, and a further $4.2 billion for Broad Street Real Estate Credit Partners III, which more than doubled the amount raised by its predecessor fund. More recently, Goldman Sachs rounded up $583 million for senior debt vehicle Broad Street Loan Partners III.

Bennett Goodman: Leading Blackstone’s credit unit

2. Blackstone $42.0bn (2017: 5)

Blackstone has consistently been in the top 10 over the past five years, never dropping below sixth. This is the second time it has taken the number two spot, having grown its five-year fundraising total from $33 billion to $42 billion.

The New York-headquartered firm manages the bulk of its private debt business via a dedicated corporate credit arm: GSO Capital Partners. Headed by Bennett Goodman, GSO handles a variety of debt strategies, including mezzanine, direct lending, energy credit and distressed. Goodman co-founded the firm alongside Doug Ostrover, who left in 2015, and Tripp Smith, who announced his departure earlier this year.

The firm’s most notable fund closes over the past five years include its flagship distressed debt vehicle, GSO Capital Solutions Fund III, which closed in March this year after raising $7.1 billion. The unit also pulled in $2.5 billion for GSO Energy Select Opportunities Fund in 2015, falling short of its $3 billion target. Now GSO Energy Select Opportunities Fund II is on the road seeking to double the amount raised by its predecessor. Blackstone also hit a final close in 2015 on a $2.2 billion Europe-focused senior debt fund.

The firm’s second-biggest close was the $6.7 billion raised for Blackstone Tactical Opportunities Fund II in early 2016, which fell short of the $7 billion raised by its predecessor. The same year, the firm pulled in $4.5 billion for Blackstone Real Estate Debt Strategies III, surpassing the $3.6 billion raised by Blackstone Real Estate Debt Strategies II just a year earlier.

John Grayken: Lone Star founder sees his firm to third

3. Lone Star Funds $37.7bn (2017: 1)

Dallas-based fund manager Lone Star has dominated the PDI 50 since the start, taking the top spot in 2014, 2016 and 2017. This is its lowest position since the first ranking in 2013 when it placed fourth.

Lone Star saw a tiny drop in its five-year fundraising total, from $37.8 billion to $37.7 billion, enough to make it fall two places.

Founded by John Grayken in 1995, Lone Star is favoured by a large pool of returning investors for its distressed and real estate funds. With a loyal LP base to support it, Lone Star spends little to no time on the road when fundraising.

Its most recent close on a flagship fund was Lone Star Fund X, which launched in October 2016 with a $5 billion target and closed a month later with $5.5 billion raised. It was also oversubscribed. The firm is now seeking $5.5 billion for the next vehicle in the family, Fund XI. Shortly before it reached the final close on Fund X, the firm closed its fifth distressed real estate fund, which exceeded a $5 billion target to raise $5.8 billion after just five months. The previous vehicle in the series also raised $5.8 billion, in 2014.

Last year was a big year for Lone Star Funds in terms of its team and overall strategy. The most notable change was Nick Beevers replacing Sam Loughlin as the firm’s president of North America. The firm also pulled out of its Middle Market Growth Programme joint venture with Antares Capital.

It made some moves in emerging markets, teaming up with India’s Infrastructure Leasing & Financial Services to form a $550 million joint venture to invest in distressed opportunities.

West coast contenders: Los Angeles-based Ares leaps up the ranking

4. Ares Management $37.7bn (2017: 10)

This year marks Ares’s highest ranking in the PDI 50. The firm made its debut in the top 10 in 2013, in seventh place. It was 10th in 2016 and 2017 before jumping six spots this year as its five-year total swelled by nearly $14 billion. The firm’s true presence in the market has arguably been under-represented in previous rankings due to Ares’s sizeable BDCs – which are included in a separate ranking.

Ares has had a good year for fundraising, reaching a €6.5 billion final close on Ares Capital Europe IV, which far exceeded its €4.5 billion target in just three months. The senior debt vehicle dwarfs the €2.6 billion raised by its predecessor.

The Los Angeles-based firm also breezed past its $2.5 billion target for its first private junior debt fund, Ares Private Credit Solutions, closing at $3.4 billion in December 2017 after launching earlier in the year. Though this is the firm’s first private vehicle to invest in junior debt, the firm has provided second-lien and mezzanine debt for years through its BDC, Ares Capital Corporation.

Ares is now in market with its US senior direct lending fund, having locked down $2.2 billion of a $4.7 billion year-end target in November, including leverage. The firm has raised the target from $3.5 billion.

5. HPS Investment Partners $36.2bn (2017: 6)

This is HPS Investment Partners’ third appearance in the top 10 having made its debut in 2016 after completing its spin-out from JPMorgan. This year the New York-based firm added just under $5 billion to its total.

The additional capital includes the $4.24 billion raised for its HPS Specialty Loan Fund 2016, which surpassed its $3.5 billion target to hit its final close in late 2017 after roughly 18 months on the road. The firm will use the capital to issue senior debt across diverse sectors in North America and Western Europe.

Prior to that, the firm closed two funds in quick succession, reaching a close on its third mezzanine fund in 2016 after attracting $6.6 billion – one of the largest fundraises that year. Shortly after, the firm reached a final close on its European asset-based lending vehicle, which raised €800 million.

HPS’s five-year total could grow even more in future rankings. In September, HPS announced it was set to acquire Talamod Asset Management, a Dallas-based distressed debt specialist.

Isabelle Scemama: leading AXA IM – Real Assets

6. AXA Investment Managers $35.2bn (2017: 7)

Not only has AXA bumped up one place this year, but the Paris-headquartered firm has also become the PDI 50’s highest ranking European manager, a title held by M&G last year when it took the number two spot. The bulk of the French insurer’s private debt business comes via AXA Investment Managers – Real Assets, a unit led by chief executive Isabelle Scemama. AXA has a sizeable real estate debt investment business that comprises insurance account money and capital raised via funds and separate accounts.

In September 2017 it raised €1.5 billion for its 10th commercial real estate senior debt fund – CRE 10 – after six months on the road. Its previous real estate debt vehicle raised €2.9 billion in 2015. AXA Real Assets is also raising its debut European infra fund which recently hit first close on $900 million. In June, AXA reached a $400 million final close on Allegro VII, a CLO fund.

Square mile star: London-headquartered M&G is a regular in the top 10

7. M&G Investments $34.8bn (2017: 2)

M&G saw its five-year fundraising total drop by $1.6 billion this year, causing it to fall back five spaces.

The firm has been in the top 10 every year since the PDI ranking started in 2013, the only European firm to achieve this. This is M&G’s lowest placing since it took eighth spot in 2013; last year was its highest, in second. M&G handles investment across direct lending, leveraged finance and infrastructure debt and has £285.8 billion ($367.6 billion; €320.8 billion) in AUM.

As part of its remit, M&G manages a large alternative credit business and a real estate debt fund unit. The firm is investing from its second and third real estate debt funds, which raised £605 million and £750 million, respectively, in 2014. Investors in the latest fund include New Jersey Division of Investment, New Mexico State Investment Council, North Carolina State Treasury and the Wyoming State Loan and Investment Board. Earlier this year, the firm launched the M&G Infrastructure Loan Fund with a target size of £250 million.

Click here to see how the PDI 50 is calculated

Leon Black: co-founder and CEO of Apollo

8. Apollo Global Management $31.1bn (2017: 3)

This is the first year Apollo is not in the top five after its five-year fundraising total dropped by $4.1 billion from $35.2 billion. The firm – headed by Leon Black – is deploying capital from its flagship Apollo Investment Fund IX, for which it reached a $24.7 billion final close in mid-2017 after exceeding its $23.5 billion target. The fund pursues three strategies: distressed debt, corporate carve-outs and opportunistic buyouts.

The firm is nearing its $2.5 billion target for its Apollo Structured Credit Recovery Fund IV, with more than $2.3 billion raised, but it is yet to reach the final close needed for it to be included in the ranking data. The vehicle – which targets CLOs, residential mortgage-backed securities, commercial mortgages, consumer and commercial mortgage-backed securities and collateralised debt obligations – is a successor to Apollo Structured Credit Recovery Fund III which reached a $1.2 billion close in late 2015. Another sizeable fund that closed in the same year was Apollo Energy Opportunity Fund at $1.1 billion.

Jay Wintrob: Oaktree’s CEO has overseen a busy year

9. Oaktree Capital Management $29.2bn (2017: 4)

Like Apollo, this year is the first Oaktree has not been included in the top five since the ranking’s inception. The Los Angeles-based firm has seen its five-year total fall by $4 billion as older funds have fallen off its total. But the firm has been active over the past year – Oaktree raised $2.2 billion for its Real Estate Debt Fund II, surpassing its $1.8 billion target. The fund held its final close in September.

It also collected $720 million for Oaktree Middle Market Direct Lending Fund, a closed-end vehicle that will invest in senior loans.

Its overall tally also includes Oaktree Opportunities Funds X and Xb, which raised a combined $12.5 billion since their inception in 2015, and the predecessor to those vehicles: the $5.1 billion Fund IX.

Oaktree is also in the market with Oaktree Special Situations Fund II, which has raised $711 million of its $1.8 billion total.

Benoit Durteste: CEO of ICG

10. Intermediate Capital Group $28.5bn (2017: 12)

London-headquartered ICG is the only firm in the top 10 that did not make the club last year, having climbed from 12th place. It comes out one place ahead of Cerberus Capital Management, which dropped from eighth. This is ICG’s second appearance in top 10, the last time being 2015 when it ranked seventh, just behind Blackstone.

ICG has seen its five-year total grow by roughly $8.4 billion from $20.1 billion last year, the fourth-biggest increase in the ranking.

The firm most recently held a final close on ICG Europe Fund VII at its €4.5 billion target size, 10 months on from its January launch. It pursues the same European corporate debt strategy as its predecessor, ICG Europe Fund VI, which closed at €3 billion in September 2016.

Other big fundraises over the past five years include ICG Senior Debt Partners Fund III, which reached a final close of €5.2 billion in September 2017, surpassing its €5 billion goal, and its predecessor ICG Senior Debt Partners Fund II, which raised €3 billion in 2015.