Private debt fundraising remained steady in the first half of 2021, raising $72.5bn (£52.3bn) across 81 funds thanks to an improving economy, liquidity in the credit markets and businesses avoiding default, a report has found.
PitchBook’s H1 Global Private Debt Report, sponsored by the American Investment Council and UMB Fund Service, found this figure is approximately on pace with the past few years and may even surpass five-year averages once final data is collected.
The report showed direct lending picked up the pace in the first half of 2021 following a drop in fundraising last year.
Private debt managers raised $33.5bn across 28 vehicles in the first half of this year, already more than three-quarters of the amount they raised in the entirety of 2020. Ares Capital Europe raised its fifth fund totalling €11bn (£9.3bn), the largest private debt fund to close so far this year.
The report said that continually low interest rates, subdued default rates, and a broader pivot toward alternatives continue driving investors into private debt strategies.
“Private debt fundraising kept a steady course in the first half of 2021,” said Dylan Cox, head of private markets research at PitchBook Data.
“Low interest rates, subdued default rates, and the longer-term pivot toward alternative strategies aided allocators in committing $72.5bn across 81 vehicles.
“Direct lending continues to stand out, accounting for about half of all capital raised. Fundraising for distressed debt and special situations funds is about on track with 2020, but opportunities for deploying capital may be few and far between due to the lack of distress in the market.
“At the outset of the pandemic, private debt funds experienced their worst quarter in the last decade, but portfolios have recovered rather quickly alongside an improving economy, surging liquid credit markets and low default rates.”
In the peer-to-peer lending space, many platforms have revealed fundraises, or plans for them, of late.
CrowdProperty has closed a £1.8m equity fundraising round, Estonian P2P lending platform Income is looking to raise €1.3m from a seed funding round, Zopa plans a £100m fundraise ahead of a stock market float and Shojin Property Partners has set a £10m fundraise target.