The Latest Private Debt Industry Statistics Explained
Private debt has surpassed approximately $800 billion in AUM globally as of 2021.
The statistic indicates that total private debt assets under management (AUM) have exceeded a sum of around $800 billion worldwide by the year 2021. Private debt refers to debt instruments issued by private companies or individuals, outside of the realm of traditional banking institutions. The growth in private debt AUM suggests an increasing interest from investors seeking higher returns in a low-interest rate environment or looking for alternative investment opportunities. This trend may reflect a shift in the investment landscape towards non-traditional asset classes and highlights the importance of private debt as an increasingly significant component of global financial markets.
Out of the nearly 500 private debt funds tracked by Preqin, nearly half focus on North America.
This statistic means that of the approximately 500 private debt funds that Preqin monitors, almost half of them have a primary focus on investments in North America. This indicates that North America is a significant market for private debt investment strategies, attracting a substantial portion of capital from these funds. The concentration of funds focusing on North America suggests that the region may offer attractive opportunities for private debt investments, likely driven by factors such as economic stability, market size, regulatory environment, and potential returns. Investors looking to allocate capital to private debt funds may find North America to be a key region of interest based on the prevalence of funds targeting opportunities in the area.
Direct lending represented 30% of all private debt fundraising in 2020.
The statistic ‘Direct lending represented 30% of all private debt fundraising in 2020’ indicates that a significant portion of capital raised for private debt investments in 2020 came from direct lending activities. Direct lending involves loans made directly by financial institutions or alternative lenders to businesses or individuals, bypassing traditional banks. This statistic suggests that direct lending has become increasingly popular as a financing option, highlighting a shift in the private debt market towards more direct forms of lending rather than relying solely on traditional debt markets. This trend may be driven by factors such as lower interest rates, increased demand for tailored financing solutions, and a desire for greater control over lending decisions.
The distressed debt segment has grown more than 15% annually from 2015 to 2020.
The statistic indicates that the distressed debt segment, referring to assets that are trading at significantly discounted prices due to financial distress, has experienced rapid growth at an average annual rate exceeding 15% between 2015 and 2020. This significant increase suggests a heightened level of financial distress among debt issuers during this period, leading to a larger volume of distressed debt available for investment or trading purposes. The growth in the distressed debt segment may be attributed to various factors such as economic downturns, corporate defaults, or changing market conditions, highlighting the importance of understanding and effectively managing credit risks in investment portfolios during times of financial instability.
Private credit funds raised a record $121 billion in 2019.
The statistic that private credit funds raised a record $121 billion in 2019 signifies a substantial influx of capital into alternative lending channels outside of traditional banking institutions. Private credit funds are investment vehicles that provide financing to companies and projects that may not qualify for traditional bank loans, offering potentially higher returns for investors. The record amount raised in 2019 suggests a growing appetite among investors for alternative asset classes and a continued trend towards diversification in investment portfolios. This statistic highlights the increasing relevance and importance of private credit markets in the global financial landscape and indicates a shift towards non-traditional sources of credit.
In distressed lending, 41% of private debt investors experienced a default in 2020.
The statistic that 41% of private debt investors experienced a default in distressed lending in 2020 reveals a significant level of risk and potential loss in the industry. This high default rate underscores the challenges faced by private debt investors when dealing with distressed assets, which are often associated with financial instability and difficulty meeting obligations. The statistic suggests that a substantial proportion of private debt investments encountered financial distress or insolvency within the past year, indicating the need for careful risk assessment and mitigation strategies in the distressed lending sector to protect investors’ interests and minimize potential losses.
Special situations account for $174bn of private debt AUM in North America as of December 2020.
The statistic “Special situations account for $174bn of private debt AUM in North America as of December 2020” refers to the total amount of assets under management (AUM) in the private debt sector attributed to special situations investing strategies in North America as of December 2020. Special situations typically involve investments in distressed assets, turnaround opportunities, or unique events that require specialized knowledge and expertise to navigate. The significant amount of $174 billion highlights the importance and prevalence of these strategies in the private debt market, showcasing the appeal of seeking higher returns by investing in assets with complex or misunderstood characteristics. This statistic provides insight into the sizable presence and impact that special situations play within the North American private debt landscape, reflecting the scale of opportunities and risks that investors in this sector encounter.
At the end of 2021, private debt strategies had nearly $114bn in dry powder.
The statistic stating that private debt strategies had nearly $114 billion in dry powder at the end of 2021 refers to the total amount of committed capital that remains uninvested or unallocated by private debt fund managers. Dry powder represents the available resources that can be deployed by these funds to make new investments or support existing portfolio companies. This substantial amount indicates the potential for significant future investment activity in the private debt space, as fund managers look to find opportunities to deploy this capital and generate returns for their investors.
Leveraged loans, a common form of private debt, have grown to a market size of over $1.2 trillion USD.
The statistic that leveraged loans, a prevalent type of private debt, have expanded to a market size exceeding $1.2 trillion USD indicates a substantial growth in the use of this financing instrument. Leveraged loans are loans extended to companies or individuals that already have significant levels of debt or financial leverage. The increase in the market size of leveraged loans suggests a growing reliance on debt financing among businesses and individuals seeking capital, potentially due to favorable interest rates or liquidity conditions in financial markets. This trend could have implications for overall economic stability, as an excessive buildup of leveraged loans could increase financial risk and vulnerability to market downturns. Tracking developments in the leveraged loan market is crucial for assessing the overall health and resilience of the financial system.
In 2020, more than 90% of private debt managers targeted a net IRR of 5-8%.
The statistic indicates that in 2020, a significant proportion of private debt managers aimed to achieve a net Internal Rate of Return (IRR) within the range of 5-8%. This suggests that the majority of these managers set their investment objectives with a target return in mind, which could be driven by factors such as risk tolerance, market conditions, and the specific goals of their investors. Achieving a net IRR in this range would be considered a moderate level of return within the private debt investment landscape, reflecting a balance between risk and reward. Additionally, this statistic might provide insights into the prevailing investment preferences and expectations among private debt managers during that period.
At the height of the COVID-19 pandemic, there was $294 billion in un-invested capital, or dry powder, in the private debt industry.
During the peak of the COVID-19 pandemic, the private debt industry had a substantial amount of uninvested capital totaling $294 billion, also referred to as “dry powder.” This statistic implies that despite the economic uncertainties and challenges brought about by the pandemic, there existed a significant amount of available funds that were not being deployed into investments. The presence of such a large pool of uninvested capital could imply caution or hesitation among private debt investors amid the volatile market conditions during the pandemic. It also suggests potential opportunities for future investments or acquisitions once the market stabilizes and investor confidence returns.
References
0. – https://www.www.forbes.com
1. – https://www.www.preqin.com
2. – https://www.www.privateequityinternational.com
3. – https://www.www.bain.com
4. – https://www.www.institutionalinvestor.com
5. – https://www.www.eisneramper.com
6. – https://www.www.globenewswire.com
7. – https://www.docs.preqin.com
8. – https://www.www.globalfundmedia.com
9. – https://www.www.intralinks.com
