Non-traded business development companies have raised $21 billion to date in 2024, according to the latest monthly data from Robert A Stanger & Co. It’s the third consecutive year the segment has surpassed $20 billion. Overall, the alternative investment funds Stanger tracks (including non-traded REITs, non-traded BDCs, interval funds and other wrappers) have raised $67.3 billion through July.
BDCs provide loans to high-growth companies across industries and are designed to provide retail investors with access to institutional-quality private investments. They are yield-oriented investments that typically generate annual returns between 7% and 10%, depending on the sponsor. BDCs are open to non-accredited investors with minimum investment amounts of $5,000. The main distribution channels are wirehouses, RIAs, and, to a lesser degree, independent broker/dealers.
Non-traded BDC fundraising is up nearly 121% year-to-date compared with 2023, according to Stanger.
Among sponsors in the BDC space, Blackstone leads the way with $6.4 billion in fundraising to date in 2024, accounting for roughly 30% of overall flows. Blue Owl Capital is next at $4.1 billion, followed by Apollo Global Management ($3.3 billion), Ares Management Corp. ($2.1 billion) and HPS Investment Partners ($2.0 billion). Brookfield Asset Management ($971.2 million), Golub Capital ($644.2 million), Nuveen ($489 million) and T. Rowe Price ($344.9 million) also made Stanger’s list.
“Fundraising in public and private business development companies has continued its blistering pace and is expected to remain strong with newcomers Alliance Bernstein, Kennedy Lewis and First Eagle recently launching public offerings,” Randy Sweetman, executive managing director of Robert A. Stanger & Co., Inc., said in a statement.
Overall Blackstone’s BDC product, BCRED, has $67.9 billion in total AUM.
“It’s definitely an area of large-scale opportunity, and everybody in the industry is recognizing this now,” Jonathan Gray, Blackstone president and COO, said during the company’s quarterly earnings call in July. “When you get to private wealth, the brands are going to matter (as well as) the scale and the ability to service. It will be a smaller number of players in that segment. It will grow over time, but it requires something different, and we have a pretty meaningful first-mover advantage.”
Among other structures, interval funds have raised $15.7 billion and other private placements, including infrastructure and private equity offerings, at $11.3 billion. Private REITs have raised nearly $3.3 billion year-to-date.
The top fundraisers in the alternative investment space overall year-to-date are Blackstone ($10.7 billion), Cliffwater ($7.7 billion), Blue Owl Capital ($6.3 billion), Ares Management Corporation ($5.8 billion), and Kohlberg Kravis Roberts & Co. ($5.4 billion).