Sun, Jan 17, 2021
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

AIMA: Hedge funds step up financing of the economy

Wednesday, May 06, 2015
Opalesque Industry Update - Hedge fund firms and other alternative asset managers are playing an increasingly important role in financing the economy, according to a new paper published by the Alternative Investment Management Association (AIMA), the global hedge fund association.

The paper says that private debt funds such as hedge funds now manage around $440 billion in assets, with some $64 billion of new capital allocated to the sector in 2014 alone.

The paper finds that the most popular borrowers of non-bank private debt are small and medium-sized enterprises (SMEs). Such businesses are typically too small to raise capital through the public corporate bond market and have been finding it difficult to borrow from the traditional banking sector since the crisis. Refinancing existing loans, pursuing acquisition and expansion plans and improving working capital are all common uses of such private finance.

A number of case studies are published with the paper, including examples of private debt funds that have supported sectors as diverse as social housing, health, renewable energy and shipbuilding.

The sector still predominately comprises US-based funds, but European and Asian funds have grown significantly in prominence since the financial crisis, the paper says.

The AIMA paper also finds that private debt funds typically use little or no leverage and are structured in a way to prevent bank-style 'runs' or other systemic problems.

The paper, titled 'Financing the Economy: The role of alternative asset managers in the non-bank lending environment', has been produced by AIMA's Alternative Credit Council, a committee of alternative asset management firms which are financing the real economy.

Its Chair, Stuart Fiertz, the President of Cheyne Capital, said: "Non-bank private debt financing, as distinguished from public corporate debt markets, has grown dramatically in popularity and volume in recent years. Buoyed by both increased demand from investors as well as a growing appetite from businesses for alternative sources of funding, these markets are starting to have a noticeable impact on economic activity."

Jack Inglis, AIMA CEO, said: "This paper builds on our recent research in highlighting the 'real economy' impact of hedge funds. Our paper last year on the activities of hedge funds and other participants in the capital markets showed a clear correlation between capital market depth and economic growth. As this new paper shows, many small and medium sized businesses would miss out on growth opportunities or fail altogether if it were not for the absolutely vital support of hedge funds and other alternative asset managers."

Mr Inglis added: "Special thanks are due to the members of AIMA's Alternative Credit Council for their guidance and support."

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. SPACs: The SPAC shareholder class action boom is coming, SPACs have a hidden risk that investors need to know about[more]

    The SPAC shareholder class action boom is coming From Reuters: I'm not the first to predict it, but the past few weeks have brought unmistakable signs that shareholder class action firms are homing in on Special Purpose Acquisition Companies, those so-called blank-check entities that g

  2. SPACs: Jeremy Grantham: "SPACs should be illegal", Spacs may fuel European IPO boom, SPAC IPOs surge, The SPAC pop is now a thing: More unicorns getting on board, Paysafe readies $9bn IPO Via SPAC[more]

    Jeremy Grantham: "SPACs should be illegal" Special-purpose acquisition companies (SPACs) should be illegal, according to Jeremy Grantham, as they escape regulatory oversight and encourage the "most obscene type of investing." Grantham is the co-founder and chief investment strategi

  3. News Briefs: What if data scientists had licenses like lawyers?, Next generation behind family offices' ESG push[more]

    What if data scientists had licenses like lawyers? From Bloomberg: Data scientists, if they're poorly qualified or act irresponsibly, can do at least as much damage as lawyers and doctors. The algorithms they create can ruin lives, aggravate social divisions, even facilitate genocide.

  4. SPACs: SPAC costs are 'far higher' than previously realized, study finds, Jim Cramer recommends profit taking in speculative electric SPAC names.[more]

    SPAC costs are 'far higher' than previously realized, study finds From Institutional Investor: The costs of going public via a special-purpose acquisition company are both "opaque and far higher" than previously recognized, new research shows. SPAC shares tend to drop by one third or

  5. Institutional Investors: Pensions swamped in a sea of negative real rates, Bahrain's pension fund authority faces collapse[more]

    Pensions swamped in a sea of negative real rates From FA Mag: Defined-benefit pension plans were already barely treading water heading into 2020. In the years ahead, the risk is as great as ever that a large swath of them will drown. As the name implies, defined-benefit pensions promis