The Lower Middle-Market Opportunity (Q3:2017)
Our Q3:2017 white paper analyzes the growth in private debt fundraising and the relatively limited institutional focus on the lower middle-market, which limits competition and pricing pressure, thereby driving compelling risk-adjusted returns.
Private Debt Fundraising & Dry Powder at Historic Levels
Global private debt fundraising and dry powder remained at historically high levels in 2016 and into 2017 YTD. As shown in the charts below, private debt fundraising increased by approximately 138%, from $41 billion in 2010 to $98 billion in 20161. However, the number of private debt funds only increased by approximately 73%, from 85 to 147, over the same period. Thus, the average private debt fund size has increased by approximately 38%, from $482 million in 2010 to $663 million in 2016. In 2017 YTD, the average fund size has increased further to $764 million. In addition, the 10 largest funds closed in 2016 accounted for approximately 47% of overall fundraising, compared with approximately 25% in 2014.