The rise and rise of direct lending

Changing banking attitudes to risk and a reduction in lending to medium-sized companies have created a shortage of capital in a European loans market heavily dependent on the banking sector.

According to S&P figures[1], for example, mid-market companies in Europe will need somewhere between €2.7-€3 trillion over the next five years for refinancing and to fund growth.

While the alternative lending market was once dogged by negative headlines about ‘shadow banking’, we believe it has gained in credibility as it has grown from a low base. In the first couple of years there was some concern about the credibility of lenders but as more deals were undertaken, alternative lenders have very much established themselves and competition is growing.

Graeme Delaney-Smith – Alcentra, a BNY Mellon company

[1]S&P Banking Disintermediation in Europe 15 October 2015.

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