Direct Lending Fundraising Hits Record Pace in Private Debt Boom

(Bloomberg) -- Direct lending funds are raising money at a record-setting pace, collecting $19.4 billion so far this year as investors pile into the market for private credit.

The new cash compares with $11.6 billion raised in the same period last year and $14.4 billion year-to-date in 2017, according to London-based research firm Preqin. Direct lending, once the purview of mainly banks, has been attracting institutional capital in recent years as investors reach for yield in a low interest-rate environment. In 2010, direct lending raised less than $10 billion for the entire year versus nearly $52 billion in 2018 and a record of almost $70 billion in 2017, according to Preqin.

Cerberus Capital Management, Neuberger Berman and Monroe Capital are among investment firms raising money for new direct-lending funds, Bloomberg has reported. In direct lending, investors make loans directly to small and medium-sized business rather than buy debt from bank intermediaries.

Direct lending funds are quickening the pace of fundraising even as the rest of private debt fundraising has been slowing. The aggregate capital raised for private debt fell to $26.7 billion year-to-date, compared with $33.6 billion in 2018, according to Preqin.

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