Investors set to increase allocation to private debt

August 22, 2016

This release was originally published on Financial News, 22 August 2016.

Investors are set to increase their allocation to private debt, with 60% revealing they believe the private debt market will grow over the next 12 months, according to a new study1 by Elian.

41% of investors are likely to increase their allocation to private debt in the next 12 months. 15% said that they would increase their allocation significantly, while 29% said it would remain the same.

The research study also revealed that a staggering 73% of investors said their investments had met or exceeded expectations, while only 13% reported investments as having fallen short of their expectations.

In comparison to only 7% of investors who believe the private debt market will shrink over the next 12 months, 41% are positive about the outlook for private debt which, a diversification play, is perceived as having superior protections versus traditional bonds and equity-like returns.

Charles Le Cornu, Head of Private Equity at Elian commented: “Complex strategies seen from traditional institutional lenders following the financial crisis have continued to weigh heavily on business growth. As a result, there has been a significant increase in demand for forms of alternative lending, specifically as institutional investors come up against continuing low yields from mainstream fixed interest vehicles.

“While private debt is still in its infancy as an asset class, this research clearly shows that investors are responding positively in their allocation levels. This is being driven by the robust performance private debt investments have demonstrated, and indeed continue to deliver.”

 

1Findings revealed in an online survey conducted by Citigate Dewe Rogerson amongst 88 private equity professionals in April 2016