non-negotiable business development companies have raised $21 billion year to date in 2024, according to the latest monthly data from Robert A Stanger & Co. It is the third year in a row that the segment has exceeded 20 billion dollars. Overall, Stanger tracks alternative investment funds (including non-traded REITs, non-traded BDCs, mutual 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 of 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 wire, RIA and, to a lesser extent, independent brokers/dealers.
Non-traded BDC fundraising is up nearly 121% year-over-year compared to 2023, according to Stanger.
Among sponsors in the BDC space, Blackstone leads with $6.4 billion in fundraising so far in 2024, accounting for roughly 30% of total flows. Blue Owl Capital is next with $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 brisk pace and is expected to remain strong with newcomers Alliance Bernstein, Kennedy Lewis and First Eagle recently launching public offerings,” Randy Sweetman, director chief executive officer 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 everyone in the industry is recognizing that right now,” Jonathan Gray, president and COO of Blackstone, said during the company's quarterly earnings call in July. “When you get to private wealth, brands will matter (as well as) scale and ability to serve. There 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 significant first-mover advantage.”
Among other structures, range 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).