State Street: Europe outpaces the US as preferred market for fundraising
State Street published the second part of its 2024 Private Markets Outlook, showing that Europe is the preferred market for private debt fundraising.
In December 2023, State Street surveyed nearly 500 investment institutions worldwide to understand their private markets investments and operations. 220 of the surveyed institutions are from Europe, evenly split between traditional asset managers, private markets asset managers, asset owners and insurers.
The anticipated growth in private markets that State Street identified in the first report in this series will have wide ranging implications for how distribution and dealmaking is conducted. The second report now shows that Europe is establishing itself as a global growth engine for private debt.
Key takeaways:
- Fundraising: The survey indicates Developed Europe is the preferred market for private debt fundraising among all respondents globally. Nearly half of respondents (47 percent) described it as a main area of opportunity, narrowly edging out North America (46 percent) and significantly ahead of Developed APAC (36 percent).
- Deals: When it came to allocating this capital, Developed Europe was in second place, with 46 percent of respondents citing it as a key market for deals, compared to 56 percent in North America and Developed APAC.
Ciaran Grant, Head of Private Equity and Real Assets for State Street in Ireland, says:
'The growth of private credit in EMEA really began during the banking crisis, with funds stepping in to provide loans to financially healthy companies looking to raise capital for growth. But, more recently, it’s certainly been the sector with the biggest growth rate we’ve seen in the private markets space in the past few years. The proportion of growth in funds containing debt issued by financially healthy companies looking to raise capital for growth, as opposed to distressed debt funds, has also been growing in recent years. Globally, distressed debt funds have been falling as a proportion of the private debt market.'
Mark van Weezenbeek, Country Manager and Head of State Street Global Services in the Netherlands, adds:
'In the Netherlands, we have seen Dutch institutional investors' appetite for private debt growing. This trend is driven by the pursuit of higher yields, the desire for portfolio diversification, and the appeal of stable returns. The supportive regulatory landscape in the Netherlands, coupled with a maturing private debt market, further enhances this interest. We also observe that investors seek private debt with a strong ESG-rating as, as they are looking to align their portfolios with strong environmental and social governance practices. This trend is likely to continue as the private debt market evolves and offers more attractive opportunities.'
