Debt fund managers sitting on record levels of dry powder

DebtPrivate debt fund managers have a record $185 billion (€166 billion) in capital from investors, which they have yet to deploy.

Information provider Preqin says that the managers are keen to invest this ‘dry powder’ but over half (51%) of the 100 surveyed felt that the competition for investments had increased over the last 12 months. A third say that it is harder to find attractive opportunities in the current market.

Investor appetite has increased according to 73% of debt fund managers surveyed, with public pension funds leading the pack. Family offices are also looking keenly at investment opportunities according to 21% of respondents.

One of the biggest challenges for fund managers over the next 12 months is going to be deal flow (be it M&A or any debt transaction), according to 43% of respondents. The next biggest concern is performance, which was cited by 40% of fund managers.

In attracting investors, 39% of fund managers intend to offer more co-investment opportunities and 34% plan to offer more opportunities for separate account investments.

Private debt fund managers are optimistic about their part in the market, with 64% expecting assets under management to grow by 50% by 2020. However, around half (49%) also believe there’s going to more competition with additional firms at this time.

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