Preqin: Private Debt Investors To Increase Commitments As Performance Exceeds Expectations

Feb 3 2017 | 12:34am ET

A large majority of private debt investors plan to increase capital commitments to the asset class in 2017 while more than a quarter of them say their private debt portfolios outperformed expectations last year, according to a new survey by industry data provider Preqin. 

The results bode well for fundraising by private debt investment managers this year, Preqin said in a statement, as only 7% of the poll’s respondents said they were dissatisfied with the performance of their portfolios. 

Preqin conducted the survey in December 2016. Other key highlights.

  • Twenty-seven percent of investors felt their private debt investments had exceeded performance expectations over the past 12 months, up from 18% a year before. 
  • 57% of investors said they intend to commit more to private debt in 2017 compared to 2016; just 11% said they planned to invest less capital than in the previous year. 
  • Over the longer term, 62% of investors plan to increase their private debt allocation, while 30% intend to maintain their current rate. 
  • Through 2016, 130 private debt funds secured an aggregate $92 billion in investor commitments, a slight decline from the $97 billion raised in 2015 but greater than in any other year since 2008. 

“Investment in private debt funds has become increasingly widespread among the institutional investor community over the past few years, with strong performance exceeding the expectations of many,” said Ryan Flanders, head of private debt products for Preqin, in the statement. “This in turn has seen a large proportion of investors seek to commit more to the asset class, both over the next 12 months and in the longer term. 

“We may see this have a beneficial effect on fundraising in the year ahead, continuing the trend of robust fundraising activity that has characterized the past two years,” Flanders added. “However, less than half of institutional investors currently allocate to the private debt asset class. In order to ensure the continued growth of the industry, fund managers will have to appeal to new investors.

"Furthermore, investors already active in the market are becoming increasingly demanding of fund managers, who will have to continue to differentiate product offerings and tailor investor terms in order to compete within the asset class.”

Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. More than 40,000 professionals in 90 nations use the company’s products

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