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Matthias Knab, Opalesque for New Managers: A market shaped by attention
Since Opalesque last spoke with Coromandel Capital in February, the firm has continued to expand its specialty finance platform and has grown firmwide assets under management by 40%. Coromandel is building its investment and risk-management capabilities to support that growth, with plans to hire an investment seat and a risk seat, with more as growth continues to manifest.
Founding Partner Rob McGregor says the firm remains focused on senior secured, asset-based lending to specialty-finance businesses. The more interesting development, however, is what has happened around them. Capital that might once have competed with Coromandel has gone chasing Graphics Processing Unit (GPU) financings, data centres, and anything else adjacent to Artificial Intelligence (AI). What is left behind is a large population of less glamorous specialty finance businesses that still need growth capital.
"We've seen some competitors stumble a little bit as they chased the latest trend, and in a lot of respects that has been vindicating," McGregor says. "We've stuck to our principles since our founding in March of 2019, and we've just continued banging the same drum, doing the same types of deals, not getting enamoured with the latest, sexy Venture Capital (VC) related stories."
Underneath that is a particular differentiating, structural point. VCs, McGregor observes, simply do not like balance-sheet lending businesses. A specialty finance company without an AI story and without a tier-one venture firm on its capitalization table struggles to raise equity, and without equity it also struggles to attract the larger lenders who only want to sit alongside tier-one VC money. "We see a lot of these businesses that are really good risk managers, they know how to underwrite, they know how to service, they know their underlying obligors and demographics incredibly well, but they just might not be as sexy," he says.
Lending to lenders
For readers new to lender finance, McGregor explains the model with a simple example: a small-business lender may make a $30,000 loan to a pizzeria that needs to replace a broken oven - a piece of mission-critical equipment that a traditional bank may be unwilling or unable to finance.
In lender finance, an institutional capital provider may finance the lender rather than lend directly to the pizzeria. The lender then originates loans to multiple small businesses under its own underwriting and servicing processes.
"Which ends up meaning that we're secured by hundreds or even thousands of underlying receivables and other contractual payment obligations, including those of small businesses, across a diversified set of borrowers," he says. Coromandel is intermediating markets that banks have vacated, by capitalising the fintechs and specialty finance companies that stepped into the void.
Early support, ensuing discipline, and the firm's ceiling
Coromandel was established with the support of an early institutional relationship, which provided an initial foundation for the firm's development. McGregor says that early support allowed the team to begin building its investment, underwriting, and operating capabilities in early 2020, despite the challenges presented by COVID. "Sometimes timing is everything," McGregor says. "To the extent COVID happened earlier or we had not secured that mandate when we did, Coromandel may have been relegated to an idea."
Since then, the firm has focused on expanding its organizational infrastructure, including its underwriting, portfolio monitoring, risk management, and back office functions. McGregor says the objective has been to develop a durable platform capable of evaluating and managing borrowers through different market environments.
Ask McGregor what he most wants understood, and the answer is a negative list. No loan purchases from other people. No broadly syndicated loans where control is surrendered. No subordinate or mezzanine. No predatory loans that present reputational or regulatory risk. No equity. Senior secured asset-based lending only.
"We see people who come into a lot of capital and they start mandate straying, and for a lot of investors that creates a lot of heartburn," he says. "Despite capital becoming more plentiful, we're not in a rush to get the dollars out the door just to do whatever deal possible, because we know that would impair the longer-term vision and the story we've been telling investors. We think in decades, not years, so short-term decisions are antithetical to our core values."
McGregor says that Coromandel's rigorous underwriting criteria and overarching discipline requires the team to decline transactions that do not meet its structural or risk parameters. The firm places a heavy emphasis on preserving capital through credit-enhancing deal structures, while not compromising on pricing just to get a deal done. Coromandel's view is that measured expansion should follow demonstrated operational capacity, not precede it.
Choosing assets that do not track the consumer
Founding Partner Alex Wu frames the ABL strategy as a decision not to grow too quickly, executed through asset selection. According to U.S. Bureau of Economic Analysis, roughly 70% of U.S. Gross Domestic Product (GDP) is household spending, so a manager who wants volume knows exactly where to find it: unsecured consumer, credit cards, and auto. Coromandel has deliberately declined (or been incredibly selective, if pursued) some of these routes given risk-reward dynamics.
Instead, Coromandel's ABL strategy emphasizes asset classes whose performance drivers are less directly tied to broad consumer-credit cycles. This includes selected small business receivables, specialty real estate, and wireless contract receivables, where underwriting is grounded in the specific collateral, cash collections, and structural projection of each facility. Debt-relief financing can be counter-cyclical: when consumers are under pressure and do not qualify for bankruptcy, demand for help getting out of debt rises and creditors are more inclined to agree to discounted settlements, otherwise sell the accounts for pennies on the dollar.
Wu draws a sharp distinction between asset-based lending and cash-flow lending, which is central to the strategy. As a simplified illustration, if an asset pool generates cash flow equal to 10% of its value each year, a cash-flow lender's primary focus is the borrower's ability to sustain that cash flow - the 10%. An asset-based lender also evaluates the full collateral pool - its composition, performance, eligibility, and expected collections - rather than relying principally on that annual cash-flow measure. "There's a bigger, more granular information set, which can give us greater control at the end of the day," he says. Control, expressed through covenants and structure, is where the safety cushion comes from.
Monitoring the cash, not just the report
The monitoring discipline follows from that, and it is where Wu believes Coromandel differs most from peers. Asset values move. The firm reconciles the change in reported asset value against the cash actually arrived, using account control agreements with borrowers over the collections accounts and AI-enabled technology to monitor and distinguish among different cash flow types. Because these are credit facilities rather than whole loan purchases, the reconciliation will not be exact, so the firm runs a tolerance band, typically 3%, and tracks the variance over time.
The relevance is not theoretical. Private credit has produced a run of fraud-related headlines, and reconciling reported asset values against observed cash is precisely the control that is designed to identify the gap between the two. "By and large, that greatly lowers that risk," Wu says. Coromandel also employs other incentive-alignment and control measures intended to reduce fraud risk holistically. Still, no control framework can entirely eliminate underwriting, operational, or fraud risk.
What comes next
Little, by design. Coromandel plans to continue developing its infrastructure, while maintaining focus on applying a consistent underwriting and monitoring process.
"Our focus is on maintaining discipline in how we evaluate and manage transactions," McGregor says. "That means continuing to invest in the people, processes, and oversight necessary to support the business."
Important Information
This article is provided for informational purposes only and reflects the views of Coromandel personnel as of Oct. 15th 2026. These views are subject to change without notice. Nothing in this article constitutes an offer to sell, or a solicitation of an offer to buy, any security or investment advisory service, nor is it investment, legal, tax, or accounting advice.
Coromandel is an exempt reporting adviser and is not registered with the U.S. Securities and Exchange Commission or any state securities authority.
Statements regarding Coromandel's plans, strategy, hiring, growth, and market opportunities are forward-looking. They are based on current expectations and assumptions that may prove inaccurate, and actual results may differ materially.
Certain information has been obtained from third-party sources, including the U.S. Bureau of Economic Analysis, that Coromandel believes to be reliable but has not independently verified.
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