Falling energy prices, concerns over China, stock indices that have swung wildly and Britain’s decision to leave the EU: over the past two years there has been no shortage of economic or political events to throw the markets into strange gyrations.
Nevertheless, seemingly undeterred, private debt fund managers have continued to gather more and more money. This year’s PDI 30 reveals that the leading private debt fund managers raised $462 billion over the past five years, beating last year’s total of $395 billion and 2014’s $318 billion.
Direct lending managers are good at making the pitch to investors that mid-market lending strategies performed well throughout the last downturn and are a relatively sound place to hide during turbulent times. The distressed debt honchos have been collecting large heaps of money to put to work once the credit cycle turns. Granted, a lot of this capital has yet to be deployed and many listed asset managers have been reporting record dry powder, but they seem confident it will soon find a home.
As in previous years, the capital raised by the top 10 eclipses that gathered by the remaining 20. The $278.2 billion capital accumulated by the leading firms is 60 percent of the top 30’s total. These firms often have such strong brand recognition that they can collect large piles of money from returning investors in no time.
The PDI ranking is now in its fourth incarnation and we have been widening our coverage of private debt firms, getting increasing participation from investment managers and honing our research to make sure we include the right numbers.
We have had many conversations and debates with the market about what exactly should or should not be included in this list. We will continue to welcome your thoughts on compiling rankings in the nebulous world of private debt, where products come in many different shapes, structures and flavours.
As it stands, the top 30 ranking is a collection of institutional third-party capital raised for private equity-style funds or separate accounts over the past five years, without counting leverage. In a separate ranking you will find public and private BDCs ranked by total assets, as they raise equity differently and are limited on leverage.