Experts revealed predictions earlier this year that the world’s alternative industry could soon be worth $1 trillion. New data from Preqin reveals that the market is now halfway there.
According to a press release from alternative assets data aggregator Preqin, the global alt-lending – also known as private debt – market is nearing a $500 billion valuation. What once stood as a $152 billion industry has now spiked to $465 billion in assets under management as of June 2014, the firm’s 2015 Global Private Debt Report found.
This boost can be attributed to stricter bank regulation, which has opened up new doors for alternative financers to do business, according to Preqin’s Head of Private Debt Products Ryan Flanders. “With growing investor appetite for the asset class and a rapidly increasing universe of managers offering private debt investment opportunities, this growth is set to continue,” he added.
Alternative financing has enjoyed steady growth in recent years, especially in 2013 when the market saw a 16 percent increase in AUM, Preqin found. Much of this growth stems from the European market, where alternative financing has taken off. According to the research, EU-based alternative lending in 2014 made up nearly one-third (31 percent) of capital raised around the world, accountable for $19.6 billion in funds. That figure increased from 23 percent in 2013.
Overall, Preqin found that the market was sitting on $154 billion ready to be invested in 2014, up from $139 billion the year prior. More than $50 billion of these funds, the research said, is intended for direct lending.
Direct lending itself has grown four times its size in the last three years, with $29.1 billion raised in 2014. The industry has a long way to go, however, as Preqin also found that 62 percent of investors surveyed said direct lending is the best investment opportunity in the current market.