Private credit fundraising increased during the second quarter after a slower first-quarter start, with direct lending funds leading the way, according to the latest data from Preqin.
Private credit notched $50.4 billion in total final close fundraising during the second quarter. Direct lending funds were responsible for 88% of the quarter’s fundraising activity with $44.5 billion raised in the strategy. An additional $54.6 billion of fundraising is currently in the interim-close stage, Preqin said.
The average size of private credit funds that closed during the second quarter hit a five-year high at $1.5 billion, Preqin reported. While average fund size reached new highs, only 33 funds closed during the second quarter, the lowest amount in five years.
“We see a virtuous cycle within private debt of larger funds finding it easier to attract funds but also having more capacity to source deals — not to mention the benefits of having experience in attracting capital, which is another theme we see,” R.J. Joshua, vice president and head of private debt and fees, research insights at Preqin, wrote in an email to Pensions & Investments, a sibling publication of Crain Currency.
The largest funds that closed during the quarter included Goldman Sachs Asset Management’s West Street Loan Partners V, HPS Investment Partners’ Specialty Loan Fund VI and CAPZA’s 6 Private Debt fund, according to Preqin data.
While direct lending funds led the pack with 14 funds closed, special-situation funds tallied nine closes, followed by mezzanine with five and venture debt with three.
North America continues to dominate in private credit. Funds focused on North America raised
Preqin does not include real estate debt or infrastructure debt within its count of private credit fundraising.
Investors are continuing to favor private credit, with 86% saying private credit had met or exceeded their expectations, according to Preqin’s upcoming Investor Outlook report. And 92% of investors said they will keep or add to their private credit positions in the next 12 months.