The brand names are winning big and still expanding

Our measurement of the most successful private debt fundraisers over the past five years shows it helps to be well-established and based in the US – an advantage that will gradually lessen.

When we ran the PDI 50 ranking of private debt fundraising over a five-year period in 2019, the total amount raised by the top 50 fund managers came out at $776 billion. In our newly published list for 2020, that number has risen by more than $100 billion to $878 billion. The warm words we frequently hear expressed about the asset class by LPs are not just words – they are backed by solid commitments.

It helps if you’re a manager based in North America, which accounted for 32 firms out of the 50, and you’re especially favoured if your home is in New York. The East Coast financial hub is the headquarters of managers that raised no less than $317 billion of the $878 billion global total. This speaks to the relative immaturity of private debt compared to other alternative asset classes. Unlike private equity or real estate, for example, private debt is still rooted firmly in the US and, to a somewhat lesser extent, Western Europe.

It’s also clear that the early movers in the GP ranks have established a position of trust with LPs, which is proving hard to erode. Nearly half of the latest fundraising total ($408 billion) was accounted for by the top 10 firms – headed by Ares Management, which leads the list for the second year running. What’s more, when it comes to the next ranking for 2021, this trend may be even more evident. The reliance on virtual due diligence during the pandemic has made investors more, not less, likely to support the tried and trusted at the expense of the aspiring next generation.

Of course, you wouldn’t expect the dominant managers to simply sit back and hope for fair tailwinds – that’s not how they got to the top in the first place. Ares’ acquisition of SSG Capital earlier this year was an illustration of the emerging growth of private debt in Asia-Pacific and the recognition that global expansion is ultimately the way forward.

Write to the author at andy.t@peimedia.com