Alternative lenders: a new era for fund leverage

As debt and other credit funds continue to increase their share of the lending market, we have seen fund managers diversifying their fund terms through the use of leverage.

Whilst investor call bridges, subscription or capital call facilities are used by the majority of funds, permanent leverage has traditionally been trickier to incorporate in funds' investment strategies, being limited both by funds' constitutional documents and managers' relationships with their investors.

However, with the increased use of leverage, the market is seeing a convergence of structured finance technology with more conventional fund finance facilities.

In this publication, we explain some of the key features of this new era of debt fund leverage in the alternative (direct) lending market and why a manager might consider using it.

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