OAKS, Pa., March 14, 2019 /PRNewswire/ -- The private
debt market has experienced significant growth since 2008's global
financial crisis, moving from a niche investment to an integral
part of institutional portfolios, but it is unclear how competitive
pressures and macro-economic changes will affect the asset class's
growth and maturation in the coming years. SEI (NASDAQ: SEIC)
collaborated with Preqin, a leading source of data and intelligence
in the alternative assets industry, surveying more than 200 private
debt managers and investors to explore this market's evolution and
potential opportunities.
"Private Debt: Preparing for the Unknown" illustrates trends in
the private debt industry, and highlights the different
perspectives shared by managers (General Partners or GPs) and
investors (Limited Partners or LPs). Highlights from the report
include:
- Private debt appeals to a wide variety of investors. In
addition to foundations and endowments, public- and private-sector
pension funds lead this segment, accounting for 51 percent of the
investor pool. However, data surrounding the role of family offices
signals a shift toward the individual investor segment, with 10
percent in average allocations and 59 percent of GPs indicating it
is becoming an even more important source of capital going
forward.
- GPs and LPs have differing opinions on the role of advanced
analytics and technology. When asked specifically about data
analytics, investors were more likely than managers to say that it
would make a noticeable impact more quickly. Half of all investors
surveyed believe advancements in analytics will spur the
development of new, customized investment vehicles, and even more
think data analytics will enable more types of investors to
participate in the private debt market in the near future. Fund
managers, on the other hand, shared their skepticism on advanced
analytics as a driving factor in shaping the industry – although
more firms are expected to rely on technology to help find, vet,
negotiate and value opportunities.
- While the asset class is expected to experience continued
growth and maturity, challenges remain. Although assets under
management are projected to double in the next five years to
$1.4 trillion, according to Preqin,
private debt is not immune to macro changes and evolving market
dynamics. Survey participants cited differing views on the threat
of increased competition from banks as they re-enter the market.
Investors believed this will increase competition, potentially
driving down returns, yet managers believed the re-entry rate will
not be great enough to significantly move the needle.
"Private debt is no longer a niche player in the private capital
ecosystem, and has moved to a position that has created both
opportunities and challenges for investors and managers," said
Jim Cass, Senior Vice President of
SEI's Investment Manager Services division. "As investor interest
in this asset class continues to grow, managers who are able to
consistently demonstrate specialist knowledge and expertise, while
leveraging new technologies and offering operational excellence,
will succeed and thrive in this space."
Notwithstanding the attraction of the asset class to
institutional investors, private debt is subject to the same market
vulnerabilities affecting other investment options and asset
classes. In order for GPs to protect themselves from adverse market
conditions and a possible slowdown, the report recommends enhancing
competitive positioning, focusing on expense management, addressing
fee concerns, and improving productivity.
To read more about the future of private debt and how managers
can position themselves for success, visit
www.seic.com/privatedebt.
About SEI's Investment Manager Services
Division
Investment Manager Services supplies investment
organizations of all types with advanced operating infrastructure
they must have to evolve and compete in a landscape of escalating
business challenges. SEI's award-winning global operating platform
provides investment managers and asset owners with customized and
integrated capabilities across a wide range of investment vehicles
strategies and jurisdictions. Our services enable users to gain
scale and efficiency, keep pace with marketplace demands, and run
their businesses more strategically. SEI presently partners with
more than 450 traditional and alternative asset managers, as well
as sovereign wealth managers and family offices, representing over
$21 trillion in assets, including 41
of the top 100 asset managers worldwide. For more information,
visit seic.com/ims.
About SEI
After 50 years in business, SEI
(NASDAQ:SEIC) remains a leading global provider of investment
processing, investment management, and investment operations
solutions that help corporations, financial institutions, financial
advisors, and ultra-high-net-worth families create and manage
wealth. As of Dec. 31, 2018, through
its subsidiaries and partnerships in which the company has a
significant interest, SEI manages, advises or administers
$884 billion in hedge, private
equity, mutual fund and pooled or separately managed assets,
including $307 billion in assets
under management and $573 billion in
client assets under administration. For more information, visit
seic.com.
Company
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Media
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Leslie
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Marie
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SEI
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Prosek
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lwojcik@seic.com
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SOURCE SEI