Cloud 9fin
How many private credit managers does an LP really need?
Jan 15, 2025
In the current landscape, private credit fundraising has hit a low, yet investor optimism remains strong. There's a notable consolidation, with capital flowing to established managers while newer firms struggle. The impact of rising interest rates and potential banking deregulation poses both challenges and opportunities for these asset managers. The discussion also hints at how political shifts, like a new administration, might influence this space in the coming year.
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Quick takeaways
- Private credit fundraising has declined significantly, yet optimism persists as potential banking deregulation may enhance M&A activity and deal flow.
- Investors are increasingly consolidating their capital among a few established managers, reflecting a trend towards selective investment in private credit firms.
Deep dives
Current Trends in Private Credit Fundraising
Private credit fundraising has seen a significant decline in recent years, with 2024 recording $167 billion raised, down from $217 billion in 2023 and $231 billion in 2022. This marks the third consecutive year of decline in fundraising within this sector. Despite this downturn, optimism remains as potential banking sector deregulation could stimulate both M&A activity and deal flow, thereby providing new opportunities for private credit investors. Investors are being cautious yet selective in their commitments, indicating that while the appetite for private credit remains, the landscape is evolving with changing economic conditions.
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