Private debt fundraising reverts to the norm

With records having been shattered last year, capital raising in the asset class has fallen to a more typical level in the first half of 2018.

Private debt fundraising totalled $59.8 billion in the first half of this year, according to preliminary data from PDI, indicating that the asset class’s huge love-in with investors may have peaked in 2017.

Last year saw almost $206 billion raised in total, with nearly $112 billion of that collected in the first six months.

However, it would be wrong to conclude that fundraising has fallen off a cliff. Since 2012, only last year and 2015 have shown stronger first-half numbers than 2018. Moreover, the total raised in H1 2018 is higher than the H1 average from 2012 to 2016 ($54.3 billion).

Should H2 2018 see only the same level of fundraising as H1, then this year will be on course to record the lowest annual total for the last five years at around $120 billion. However, in four of the last six years, fundraising has accelerated in the second half of the year.

The slowdown in the pace of fundraising may come as a relief to observers who believe that the asset class has been heating up too fast, with a huge inflow of fresh capital competing for a limited number of deals. With fears of an end to the long-benign credit cycle at some point soon, it appears investors may have acted to turn off the taps.

GSO Capital Solutions Fund III is the largest private debt fund raised so far this year at $7.1 billion, followed by Broad Street Real Estate Credit Partners III ($6.7 billion), CVI Credit Value Fund IV ($3.0 billion) and Strategic Value Special Situations Fund IV ($2.85 billion).