Private capital fundraising globally continued to contract in 2024, including in the Asia-Pacific region, where the private capital market faces challenges, but the private debt market is showing potential, according to a recent webinar.

Global private capital fundraising in the first three quarters of 2024 totalled over US$800 billion, with only US$1 trillion projected for the full year, a notable 28.6% decline from the US$1.4 trillion raised in 2023, according to data presented during Preqin’s Private Equity, Venture Capital & Private Debt in 2025 webinar.

Private equity ( PE ) remains the largest contributor to this fundraising – accounting for roughly half of the total – but deal flow and exits have weakened due to a risk-averse market environment. Following PE, private debt is the next largest asset classes by fundraising activity.

Asia-Pacific challenges

In Asia-Pacific, the PE market has faced mounting challenges, particularly due to a cautious outlook on China – the region’s largest economy – and ongoing geopolitical tensions. In contrast, the private debt market is expected to attract increasing investor interest over the long term.

The Asia-Pacific PE market has experienced its slowest fundraising pace in a decade, trailing behind activity in the US and Europe. This slowdown is primarily attributed to investors’ reluctance to allocate capital to China-focused funds.

Interestingly, the proportion of PE fundraising in Europe has grown in 2024, according to speakers during the webinar, with investors increasingly viewing it as an alternative to Asia-Pacific-focused investments.

Despite the subdued performance in the broader Asia-Pacific region, India and Southeast Asia have emerged as bright spots. Investors, according to a Preqin survey, believe these markets offer the best investment opportunities in the next 12 months.

“There are several challenges for global LPs [limited partners] allocating to India due to taxation issues and currency depreciation impacting returns,” says Kapil Singhal, managing partner of private credit at True North, speaking during the Preqin webinar. “What initially appears to be a 20% return in local currency possibly translates to only a 15% return in dollars.”

Private debt growing opportunity

While private debt fundraising in 2024 declined compared with 2023, partly due to expectations of interest rate cuts, it has gained traction as a reliable income investment as it offers diversification and a steady income stream, which appeals to investors seeking stability.

Notably, 92% of investors, Preqin research indicates, believe private debt has met their expectations over the past 12 months. Within this asset class, direct lending remains the most attractive strategy, with 54% of respondents favouring it.

“Private debt is expected to deliver steady returns from 2025 to 2029,” says RJ Joshua, Preqin’s head of private debt and fees. “Our long-term analysis suggests that Asia-Pacific has secured its place in institutional investors’ portfolios, accounting for approximately 6% of private capital raised over the long term.

“However, fundraising levels can vary significantly year to year. Asia-Pacific also relies more heavily on bank lending compared with other regions, which highlights the untapped potential for private debt lending. One trend we observed in 2024 is that Asia-Pacific banks are increasingly partnering with private debt funds.”

Eddie Ong, SeaTown’s deputy CIO and head of private investments, shares a similar perspective: “Investors currently focused on the US or other developed private credit markets are increasingly exploring Asia-Pacific opportunities as developed markets face significant changes. One key factor is the declining risk-free rates and narrowing corporate credit spreads. In other words, investors are no longer being compensated adequately for taking on additional credit risks in developed markets.

“In Asia, our credit structures are typically more diversified, with strong credit governance and protection through hard collateral. This creates significant value for investors looking at Asia private credit from a risk-adjusted perspective. The premium in returns over developed markets continues to attract a growing number of investors to this region.”