Private debt fund managers target $124bn

Almost 200 private debt funds are chasing combined commitments of $124 billion, according to PEI research, as managers look to exploit credit opportunities created by banks’ partial retreat from the market.

Private debt is growing fast as an asset class, that much is clear. A raft of funds – 196 to be precise – which will invest in credit instruments are currently on the fundraising trail. Collectively, they are chasing commitments totalling $123.3 billion, according to our in-house research.

The largest fund in the pipeline is a vehicle managed by Shanghai International Group. Its Sailing Capital International Fund, launched in February this year, is targeting 50 billion yuan ($8 billion; €6.1 billion) in commitments and will have the flexibility to invest both debt and equity in corporate deals.

Other substantial funds include Oaktree Capital Management’s latest vehicle, Oaktree Opportunities Fund IX, which is targeting $4.9 billion in commitments. 

Blackstone subsidiary GSO Capital Partners’ GSO Capital Solutions Fund II has a $4 billion target, while Cerberus is chasing $3.8 billion for Cerberus Institutional Partners V. Bain Capital affiliate Sankaty Advisors is seeking $3.5 billion for its fifth credit opportunities fund.

There are sizeable funds focusing on infrastructure and real estate debt too.

Harbourmaster Capital Management is targeting €2 billion for Harbourmaster Infrastructure Debt Fund, while Australia-based Westbourne Capital is targeting A$2 billion ($2.1 billion; €1.6 billion) for an infrastructure debt vehicle targeting opportunities in the Asia-Pacific region.

The Blackstone Group leads a raft of managers raising capital for real estate debt opportunities, eyeing $3 billion for Blackstone Real Estate Debt Strategies. AgFe is seeking to raise a £1 billion ($1.6 billion; €1.2 billion) real estate fund, while Henderson Global Investors, AXA Real Estate, LNR Property, Selene Investment Partners and Torchlight Investors are all also targeting funds of $1 billion or more.

Most importantly, investors seem to be warming to the asset class. The $5.7 billion New Hampshire Retirement System, for example, recently announced a 5 percent allocation to private debt within its alternatives portfolio, which itself has been increased from 10 to 15 percent. And Pennsylvania Public School Employees’ Retirement System committed more than $943 million to private debt funds at its September meeting.

The growth of this discrete asset class is such that we at PEI feel it deserves its own, dedicated publication. So early next year, we’ll be launching Private Debt Investor. We’ll be launching the publication’s website first, followed by a magazine shortly thereafter. We’ll bring the same insight, analysis and expert commentary you’ve come to expect from Private Equity International, PERE and Infrastructure Investor.
 
We believe Private Debt Investor is relevant to all participants in a modern capital structure: from any equity investor requiring debt to make their deal work to anyone providing it; from banks, debt funds and advisors who work on deal structuring and fund formation, to the investors who are increasingly committing capital to this asset class directly. And we will of course track the progress of the aforementioned funds, and their peers, with great interest.

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