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Alternative Lending conference questionnaire

Redactie IIR, Trainingen & Conferenties

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Philip Rutovitz from TMF Group answers some questions about what Alternative Lending means to TMF Group and speaks about the future of Alternative Lending.

Why do you think the market of Alternative Lending is expanding?

Primarily there are 5 major reasons that the Alternative Lending space is growing:

  • Banks have become more and more conservative, tightening lending criteria since 2008. Basel III and Basel IV are focused on strengthening bank capital requirements and decreasing leverage, meaning that banks, further constrained from lending, will give up a significant portion of market share to direct lenders.
  • The number of SME’s continues to grow in NL by approx. 100k per year and the appetite for new funding is growing year-on-year.
  • Alternative Lenders can serve the smaller funding needs (€500k to €5 million) of SMEs which banks do not like to fund (i.e. making a €1 million loan costs about as much as making a €10 million loan and requires the same amount of attention).
  • Alternative Lenders can be more focused and streamlined as they address a smaller market with technology-aided process.
  • Debt funds have excess capital to allocate and the loan markets provide an opportunity for yield.

 

What is your place in the chain of Alternative Lending?

We provide Loan Servicing, Fund Administration and the more traditional Loan Administration services; including Security & Facility Agent Services in support of both syndicated and bilateral lending. We also offer KYC, corporate management and accounting services.

What is your added value in this chain?

By offering the complete package from start to finish, we can truly offer one-stop shopping for administrative services in the Alternative Lending space. We work with our clients to meet their specific needs including client-facing portal, APIs and customized reports. With our global footprint, we can support cross-border structures with ease.

What do you think is the benefit for the end customer (comparing to the traditional way of lending)?

The end-customer benefits by being able to get a loan in the first place. Beyond that, borrowers can find a better fit by finding a lender with the appropriate risk tolerance and that offers the desired loan characteristics. The downside is that it is becoming quite a crowded market (even though relatively small in volume) and it may be challenging and/or overwhelming to find the right lender.

What is the most important trend in the market of Alternative Lending and how can investors, platforms and/or stakeholders take advantage of this?

Banks are focused on large cap companies and have opened up a little towards mid-cap companies. Debt fund managers are becoming an important source of funding for mid-cap companies and as they have huge amount of dry powder to deploy they are even looking at large cap borrowers where initially they did not have appetite to lend given low yields.

Debt fund managers are increasingly looking to outsource their back and middle office requirements related to their loan exposures to third parties like TMF Group. The emergence of the direct lending market and funds moving into the lending space has meant the funds have had to expand their committee approval structures to cover both credit (i.e. lending), together with their more traditional investment committee model.

In terms of technology, the most important trends in the Alternative Lending space is the move to blockchain lending. This is not a reality today, but will be in the next 2-3 years. It is a little too early but my suggestion would be for investors to keep an open mind, borrowers to be wary but positive and platforms to get on the bandwagon while there is still space!

Ask your questions at the Alternative Lending Event

Would you like to discuss the future of Alternative Lending further with Philip? Join us at the Alternative Lending Event. Book your tickets now and ask your questions in person.

Alternative Lending | IIR

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