Private credit continues to gain market share as investors seek defensive allocations offering diversification away from public market volatility. By focusing on secured and collateralized credit opportunities with strong downside protection, private credit can deliver attractive risk-adjusted returns.
Within the private credit landscape, asset-based finance has emerged as a significant and fast-growing segment. This approach involves lending backed by diversified pools of loans, receivables, or other tangible assets, often in collaboration with specialist originators or finance companies.
Through a series of focused insights, we examine the key sectors of asset-based lending – explaining how they operate, the opportunities they unlock, and the value they bring to building resilient credit portfolios.
Commercial Finance
Provides businesses with funding to acquire essential equipment, such as machinery, vehicles, and technology. Structured as secured loans or leases, these transactions use the equipment itself as collateral, reducing credit risk.
Provides liquidity to businesses by advancing capital against unpaid invoices or future receivables. These short-term facilities are typically secured by the receivables themselves, offering investors access to self-liquidating, secured credit exposure.
Provides early payment solutions to suppliers based on invoices approved by buyers. Financing is typically short-term and secured by trade receivables or purchase obligations, offering predictable credit exposure to established corporates.
Provides businesses with capital secured by inventory, enabling companies to meet working capital needs while maintaining sufficient stock levels. Financing terms are typically aligned with inventory turnover cycles, and loans are secured by the underlying goods, offering investors a self-liquidating and collateralized credit exposure.
A short-term lending strategy providing immediate capital to borrowers until permanent financing or a liquidity event occurs. These loans are typically secured by tangible assets and offer investors access to short-duration, collateral-backed credit exposure.
Structured credit instruments that provide capital to companies for working capital, expansion, equipment purchases, or other operational needs. Loan structures vary offering investors diversified exposure to small and mid-sized enterprises and commercial borrowers.
Consumer Finance
Provides funding for the purchase, lease, or inventory management of vehicles. As one of the most established and scalable segments within asset-based finance, it offers investors secured exposure to a durable, income-generating asset class.
Provides financing for the purchase, lease, or inventory management of boats, yachts, and other watercraft. Typically secured by marine assets, given the high-value nature of the collateral it offers investors access to a niche, collateralized credit exposure.
Provides capital to students or parents to cover tuition, living expenses, and related educational costs. Loans are typically structured as long-duration instalment payments and may be secured through credit guarantees or income-based repayment mechanisms.
Provides capital to individuals for the purchase, refinancing, or renovation of residential properties. The sector includes conventional mortgages, government-backed loans, and non-agency lending solutions, offering investors diverse exposure to housing-related cash flows.
Lending not backed by specific collateral, relying instead on the borrower’s creditworthiness and cash flow for repayment. This category includes personal loans, credit cards, and unsecured business loans, often characterized by higher interest rates, providing investors with exposure to a higher-yielding segment of the credit market.
Provides instant instalment-based financing at the time of purchase, allowing consumers to spread payments over time. The sector offers investors access to short-duration, transaction-linked credit exposure.
Specialized Finance
Advances capital to healthcare providers based on outstanding medical invoices and insurance claims. By monetizing pending claims, this strategy offers investors short-duration, secured credit exposure tied to essential services.
Provides capital to plaintiffs, law firms, or legal entities in exchange for a share of potential case proceeds. Returns are uncorrelated to traditional markets and depend primarily on legal outcomes and case-specific dynamics.
Enables individuals or businesses to pay insurance premiums over time rather than in a single upfront payment. This financing offers investors asset-backed exposure to essential, time-sensitive obligations.
The purchase of in-force life insurance policies from policyholders in exchange for a lump-sum payment exceeding the policy’s cash surrender value. This strategy transforms illiquid personal assets into institutional investments, offering non-correlated returns driven by actuarial and longevity risk.
Lending provided to investment funds to support liquidity needs, optimize cash flow, or bridge capital calls. These facilities are typically secured by investor commitments, fund assets, or portfolio investments.
Capital is deployed against future royalty streams generated by music copyrights. Investors may acquire royalty rights outright or lend against future cash flows, gaining exposure to intellectual property monetization and recurring revenue streams from music consumption.
Video series
In this video series three of our senior leaders – JP Marra, Head of US Asset Management, Ashees Jain, US Chief Investment Officer and Kent MacWilliams, Head of US Credit Investments – provide transparency into our detailed and diligent approach to private credit investing explaining how and why it sets us apart.
