Direct lending fund markets are booming while more traditional lending establishments are witnessing moderate growth compared to previous periods. Comparing private debt fund capital raised in the last year (2017-2018), the available pool fell from $25 billion to $14 billion as of the first quarter of 2018.
As Gareth Henry, a voice for private credit and hedge funding explains, economic crisis succeeded by changes in financial law have caused major shifts in lending appetites. Special investments, distressed asset situations, and even mezzanine lending have been cut as a result of the new regulatory environment. However, direct lending strategies have gained prominence amongst private credit markets.
The boom in direct lending is not only due to a tightening in rules, but also the need for faster, more efficient ways for consumers and businesses to access money. Direct lenders, Gareth Henry says, help make capital cheaper. Lower monthly payments on Loans with low rates spurs economic activity. The use of scoring algorithms give private creditors competitive advantage. See more at bizjournals.com for more business news.
On a larger scale, institutional investors have made massive investments into private debt funds, broadening their power and popularity. PCs, as Gareth Henry refers to them, have moved from the fringes of finance to the spotlight in the global economy.
At its basic core, the business premise of direct lending is simple- its lending without the bank. These lenders de ploy debt and or equity funds, possibly ownership stake for a percentage of the target company for a specified amount of time.
Gareth Henry is no stranger to the worlds of hedge funding and traditional bond investment. Henry served as head of investor relations for billion dollar firm Fortress Investment Group. Fortress was recently acquired by SoftBank.
He has helped asset managers reach alpha in their portfolios. Graduating in actuarial math at University of Heriot Watt, the talented quaint took his expertise to Wall Street, acting as a central adviser to key decision makers.
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