Preqin: Four Out Of Five Private Debt Managers Plan To Invest More This Year

May 4 2017 | 8:42pm ET

A large majority of private debt managers expect to deploy more capital into their strategies this year than last year, according to a survey from industry data provider Preqin, despite an environment of high valuations and stiff competition. 

Almost four out of five managers said they were planning to invest more in 2017 compared to 2016, Preqin reported, and no firms participating in the survey indicated they would look to decrease investment levels. 

However, fund managers noted valuations are a key challenge facing the industry, and that competition is fierce. The majority are seeing more competition for deals than a year ago, and almost a third said it was harder to source deals, which is leading managers to review more opportunities and deploy more capital. 

Other key facts from Preqin’s Private Debt Fund Manager Outlook: 

  • Seventy-nine percent of private debt fund managers plan to invest more capital in 2017 than in the previous 
12 months, while no firms intend to decrease their investment levels. 

  • Forty-two percent of fund managers cited valuations as the key challenge facing the private debt industry, followed by fundraising (32%) and deal flow (31%). 
  • At the same time, 55% of managers state that there is now more competition for transactions than a year ago, with just 6% witnessing a decrease in competition. 

  • It is becoming increasingly difficult to find attractive investment opportunities: 31% of surveyed fund managers stated that it is now harder to source deals than a year ago. 

  • In response, 59% of private debt managers are reviewing more investments than they were 12 months ago, compared with just 8% that are reviewing less. 

  • However, performance is not expected to suffer – the majority (55%) of firms are not altering their targeted returns due to competition. Just 10% of respondents cited their ability to fulfill investor demands as a major issue in 2017. 

  • Nearly four-fifths (79%) of firms expect the assets under management held by private debt firms to grow in 2017, while just 1% are predicting the industry will constrict. 

“Private debt fundraising has been strong in recent quarters – Q4 2016 alone saw managers secure over $50bn of investor capital – and investor appetite for the asset class remains high,” said Ryan Flanders, head of private debt products. “As such, it is of little surprise that fund managers intend to ramp up the level of capital they deploy in the coming months, despite deal valuations and competition levels both remaining high.”

The poll’s findings are based on surveys of 73 private debt fund managers conducted by Preqin in November 2016. 

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.

In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...


CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...