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Benedicte Gravrand, Opalesque Geneva for New Managers:

Changes in financial regulations post-2008 (Dodd-Frank and Basel III) are forcing banks to significantly alter their core lending businesses. And as mid-sized companies are increasingly overlooked by banks because of stricter lending standards, hedge funds and other investors have been filling the gap. Now, direct- or asset-based lending funds are attracting multi-year capital commitments to make loans to businesses.

These lenders of last resort typically charge interest rates that are several percentage points higher than banks. According to NYTimes, in 2010, Highbridge started a $1.6bn fund that lends money to midsize companies. Blackstone Group started a $3bn fund. FrontPoint raised $1bn for a lending fund. Other firms that started such funds include Avenue Capital, BlueBay Asset Management, Omni Partners and Czech Asset Management. Then there are other hedge funds, such as Marshall Wace, Toscafund and Arrowgrass, that have of late started investing in peer-to-peer lending platforms or electronic invoicing.

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