Non-public credit score fundraising has remained resilient amid a muted backdrop for broader options, new Moody’s analysis has discovered.
Evaluation of six European various asset managers that the rankings company screens – Man Group, ICG, Tikehau, Patrizia, EQT and Companions Capital – confirmed that general fundraising fell by 18 per cent year-on-year within the first half of 2024 to €26bn (£21.8bn) regardless of a progressively enhancing macroeconomic surroundings.
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Moody’s mentioned the downturn displays low exit volumes, which leaves funds locked up for longer, in addition to decrease demand for various investments due to improved rates of interest on liquid belongings.
Nonetheless, whereas general fundraising fell, inflows into personal credit score methods elevated by 72 per cent year-on-year to €8bn.
In distinction, personal fairness fundraising fell by 12 per cent to €11bn and actual asset inflows fell by 53 per cent to €7bn.
The Moody’s report additionally confirmed that the six asset managers’ complete belongings beneath administration (AUM) rose by 5 per cent within the first half of 2024, extending an unbroken run of annual development since 2017.
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It mentioned that this displays a rise in valuations which lagged the general public market rallies of the second half of 2023.
Non-public credit score once more outperformed different options, with AUM rising by eight per cent within the first half of 2024.
Non-public fairness AUM grew by seven per cent, whereas actual asset AUM rose by one per cent, with infrastructure up by 4 per cent and actual property AUM remaining flat.
“The cohort’s AUM has greater than doubled since 2018, and the European various asset sector now accounts for round 25 per cent of the worldwide market,” Moody’s mentioned.
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“Managers have taken strategic actions to place themselves for development, however it will in the end depend upon their capability to exit portfolio positions in a well timed method and at engaging valuations, which can stay a headwind over the medium time period. If investor capital stays locked up for prolonged intervals, investor confidence will undergo, whereas managers who’ve discovered methods to return capital will profit.
“Non-public markets are increasing globally, and various managers have emerged as main gamers in credit score and actual belongings. Traders, particularly long-term gamers corresponding to life insurers and pension funds, have turn into extra keen to give up liquidity for higher returns.
“Alternate options additionally provide diversification advantages, low correlation with public markets and direct entry to asset lessons corresponding to inexperienced infrastructure.”
