A record-breaking year for private debt

The $90.7 billion raised for private debt strategies in the first nine months of 2015 has already exceeded last year’s 12-month total of $80.6 billion, and is 38 percent higher than the $65.5 billion accumulated in the first three quarters of 2014.

With three months to go, 2015 is on track to surpass the previous record year of 2013, when $104.8 billion of capital was raised. According to PDI Research & Analytics, final closes will hit the $120 billion mark by the end of December.

Thirty-six funds held final closes totalling $29 billion in the third quarter of 2015, the data show. Fundraising volumes in the first and second quarters stood at $28.5 billion and $32.6 billion, respectively.

European managers dominated Q3. London-based ICG held the biggest fund closes with its second direct-lending fund and fifth mezzanine fund both raising €3 billion. AXA closed its commercial real estate debt fund, CRE Senior 9, on €2.9 billion, while Ardian raised €2 billion for its third generation private debt fund.

But while the volume of capital raised has leapt, the number of funds has not kept pace. Over the first nine months, 114 vehicles were recorded as reaching their final close, compared with 97 in the same period last year. By comparison, 2013 saw $73 billion raised by 101 funds in its first three quarters.

This means that average size is increasing, a trend that is clear in Europe. 

Macquarie Group hauled £739 million for its infrastructure debt strategy MIDIS. The largest private debt fund to close in the US was distressed strategy Castlelake IV on $1.9 billion.

Senior debt origination beat other strategies solidly to haul almost 35 percent of the total raised in the third quarter. Unitranche, also a first-lien debt origination strategy, accounted for 11.8 percent.

Fundraising for distressed debt represented 15.4 percent of the total figure in the third quarter.