Dry debt powder reaches record levels

Private debt fund managers are currently sitting on a record $185 billion in dry powder, capital commitments from investors that are yet to be invested.

Says Ryan Flanders, head of private debt products, Preqin: “The private debt industry has witnessed tremendous growth in recent years, and fund managers are now sitting on a record level of dry powder. Preqin has recently surveyed over 100 private debt fund managers to gauge their outlook for the coming year.

“This has shown that fund managers intend to deploy a lot more capital over the next 12 months, but over half feel that competition for investment opportunities is higher than a year ago. Furthermore, a third of respondents stated that they were finding it harder to identify attractive investment opportunities in the current market. Although fundraising levels are buoyant for the private debt industry, fund managers will be keen to demonstrate they can put capital to work to ensure they can continue to attract future commitments from investors.”

Fund managers are keen to invest this capital in attractive investment opportunities, as 66 percent of respondents to a recent Preqin survey of over 100 private debt fund managers indicated they plan to deploy more capital over the next 12 months. Yet managers face intense competition from their peers – over half of survey respondents (51 percent) noted that they felt competition for investments had increased over the past 12 months, and a third claimed it was harder to find attractive opportunities in the current market.