Allianz Global Investors, the asset management arm of insurance company Allianz Group, is pushing to raise at least 1.5 billion euros (about 1.63 billion US dollars) for a new global private credit fund, as investors show keen interest in this asset class.
According to company documents, the firm established the Allianz Global Diversified Private Debt Fund (AGDPDF) II in Luxembourg in mid-June.
In April of this year, Allianz raised 3.3 billion euros for an earlier fund, far exceeding the initial target of 1.5 billion euros.
A spokesperson stated that the fund plans to have its first closing by the end of the year, meaning it will have secured enough capital to begin investing.
Fund managers are vying for a slice of the growing private credit market, which emerged after the financial crisis in 2008 and is currently estimated to have a size of 1.5 trillion US dollars. Private credit funds are increasingly able to compete with banks, including providing financing for large company acquisitions.
Economic uncertainty caused by soaring interest rates has greatly slowed the pace of fundraising, but according to data from Preqin, private credit funds still appeal to investors, having raised more than 130 billion US dollars so far in 2023.
The Proskauer Private Credit Default Index shows that the default rate dropped to 1.64% in the second quarter of 2023, after two consecutive quarters of increase.
Decades of rising borrowing costs have posed a challenge to private credit, but so far, borrower defaults have been very limited.
According to Reuters, Allianz's insurance business has rapidly increased its allocation to alternative investments such as private equity and infrastructure, and is now turning its attention to pure bond investments, which have become more attractive due to rising interest rates.
According to Reuters, Allianz's insurance business has rapidly increased its allocation to alternative investments such as private equity and infrastructure, and is now turning its attention to pure bond investments, which have become more attractive due to rising interest rates.
