PDI Q3 Fundraising Report 2016

Sluggish Q3 private debt fundraising – $19 billion amassed through 28 funds holding final closes – set the aggregate amount of capital raised by closed-ended funds in the first nine months of the year at $67.4 billion. With only 101 investment vehicles closed between 1 January and 30 September 2016, it will take a late flurry of large fund closes to achieve the $106.3 billion raised in 2015 by year end. Unless fundraising gathers pace in Q4, it is likely that the amount garnered by closed-ended private debt funds in 2016 will be some way off the 2013 zenith – $120.6 billion – and more in line with the $93.2 billion raised in 2014.

Funds in market offer a bright light at the end of the tunnel however, with 458 funds targeting $245.8 billion as at the end of September 2016. The top ten vehicles by amount of capital sought from institutional investors can be credited for almost a fifth of this – $45.9 billion. Oaktree Opportunities Fund Xb, the largest fund in market at the time of writing, smashed its $7 billion target at first close in 2015, and will bring a healthy boost to private debt fundraising when it holds a final close.

Despite the gradual yet steady year-on-year decline in the amount of capital raised by distressed debt vehicles – from $36.9 billion to $23.4 billion between 2012 and 2015 – a quarter of all private debt capital amassed in 2016 was focused on this investment strategy. In this report, we analyse funds with a focus on distressed opportunities and look at the future of the market. With $80.7 billion being sought by distressed funds, and six out of the top ten private debt vehicles on the road targeting this strategy, distressed debt is set to boom in coming years.

On pages 10-11, we feature two investor profiles showcasing investment allocations to and appetite for the asset class. This quarter we feature FMO, based in The Hague, and Austin-headquartered Employees Retirement System of Texas.

Finally, the report offers some headline key data from the soon-to-be published annual investor survey carried out by Private Debt Investor. Surprisingly, the majority of limited partners stated that they would be looking to increase the number of GP relationships within the next 12 months and offered views on first-time fund managers in what is already a saturated market.

PDI Q3 Fundraising Report 2016