A survey by IQ-EQ has found that 95% of global managers, with combined overall AUM of $388bn, believe the sector will grow over the next three years.

Notwithstanding the uncertain outlook projected across many asset classes, most global fund managers remain confident about the potential growth of the private debt market, a study by financial services firm IQ-EQ and research company IFI Global has found.

According to the survey, 95% of investors and managers from Europe, North America, and Asia-Pacific, with combined overall assets under management of $388bn, still believe private debt is set to grow over the next three years.

The study has also found that more than 60% of respondents do not anticipate a drop-off in fundraising at all.

“Covid-19 is not thought to have negatively impacted the debt market’s growth potential, nor is there expected to be a drop-off in fundraising,” said Justin Partington, IQ-EQ’s group head of funds. “Much, of course, does depend upon what happens to the global economy, however so far most projections are seen as positive for the debt market in particular.”

The optimist, however, clashes with short-term predictions by data provider PitchBook that private debt funds are set to deliver the worst performance since the global financial crisis, when returns were as low as -30%.

According to PitchBook, public buyout firms, such as KKR, have marked down its credit portfolios – ranging from 8.1% to 21% – in the first quarter of the year, which would be an early indicator of the grim scenario ahead, the company said in its latest Global Private Debt report.

The pandemic has also severely impacted private debt fundraising this year. In the first six months of 2020, only 56 vehicles collected $47.8bn, down by 45% from the $88.6bn raised in the same period last year, PitchBook said.

Source: Private Equity News

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