The rapid rise in interest rates over the past two years has made it much harder to finance deals that employ large amounts of debt, such as most investments by private equity funds. This has led to an abrupt drop in private equity transactions: total global private equity and venture capital deals fell from 20,887 in 2021 to 12,016 last year, according to S&P.
However, at the same time that tighter conditions are squeezing private equity, they are creating opportunities for private debt – or so many in the industry hope. Jonathan Gray, president of alternative-investments giant Blackstone, has called it a “golden moment” for the fast-growing market. Preqin, the alternative-asset data firm, forecasts there will be $2.8trn in private-debt assets by the end of 2028, up from $1.5trn in 2022 and just $280bn in 2007. And anybody who has flicked through the recent crop of 2024 outlooks from asset managers will have noticed that many of them are very keen to talk about what it can add to a portfolio.
So what is private
