Assets in private debt have tripled since December 2007 to hit a record $638bn (€594bn) as of the end of June last year, according to data provider Preqin.
It did not yet have data for the second half of 2017, but said information so far indicated 2017 could end up being a record year for capital distributions to investors.
In H1 2017 managers returned $71bn, which raised the prospect of the industry distributing more than $100bn through the year for the first time.
The record so far is shared by the years 2015 and 2016, when more than $90bn was returned to investors in each year. The net flow of capital to investors was negative in those years, however.
Private debt funds returned 18.4% in the year to June 2017, Preqin said. The asset class produced 10.9% a year on average over five years.
Just over 50% of investors had a positive view of private debt, and 42% planned to commit more to private debt this year than they did in 2017, according to Preqin.
The flood of capital into the asset class meant private debt managers had more dry power than ever before – nearly €250bn – as of the end of 2017, according to Preqin.
Ryan Flanders, head of private debt products, said this had created pricing pressure.
“[T]here are dangers that come from growing too fast too quickly,” he said, “and fund managers and investors alike are alive to concerns that the influx of capital to the asset class might make for a challenging deal making environment.
“Both fund managers and investors cited valuations as their top concern for 2018, and if fundraising continues at its current pace, these conditions are likely to intensify.”
At Blackstone, investor appetite for private debt meant its credit business overtook real estate as the alternatives fund manager’s largest business line.
Its total real estate assets under management rose from $102bn in Q4 2016 to $115bn at the end of 2017, but its credit business grew faster – from $93.3bn to $138bn.
The manager attributed much of the growth of its credit business to inflows from its new Blackstone Insurance Solutions platform, and its acquisition of Harvest Fund Advisors.
Its total assets, including private equity and hedge funds, rose from $367bn to $434bn. Blackstone came in 48th in IPE’s 2017 Top 400 asset manager ranking.