Chart of the Week: European private debt assets hit record $200bn

The European private debt industry has expanded again this year in terms of total assets, despite lower fundraising levels than last year, according to new data.

Alternatives firm Preqin released new figures for the sector showing that Europe-focused private debt assets had reached $200bn (€178bn) so far this year. The industry was set to expand further as it benefited from being less crowded than its North American counterpart, the data firm said.

The number of active private debt investors targeting Europe has risen to 1,755 so far this year, up from 1,515 in the whole of 2017, according to Preqin’s new data.

Last year was a record-breaking year for private debt fundraising, Preqin said, with 56 funds closing having raised $45bn.

So far in 2018, 35 Europe-focused private debt vehicles have closed, raising $27bn.

Total Europe-focused private debt assets under management were higher in the year so far than for the whole of the previous year, rising to $200bn, up from $188bn in 2017.

Tom Carr, head of private debt at Preqin, said: “Europe is of abiding interest to private debt investors and fund managers alike – although it is a developed credit market with lots of opportunities for investment, it is not as saturated with industry participants as the North American market.”

He said this had created the ideal circumstances for growth in the sector that did not seem likely to recede anytime soon.

“With the majority of investors citing Europe as a continued area of interest, we can expect to see capital keep flowing to the region in the coming months,” he said.

Of the $200bn of total private debt assets, Preqin said $126bn was unrealised value and $74bn was dry powder.

Direct lending assets accounted for almost half of all Europe-focused private debt assets under management as at November 2018, the data showed, totalling $97bn.

This was followed by distressed debt with $48bn under management, mezzanine at $32bn and special situations at $23bn.

Venture debt, meanwhile, accounted for $1bn of assets under management.