Corporate financing: surge in demand for credit funds
Interest in private debt strategies is experiencing a significant surge. “Credit funds have firmly established themselves and are seeing strong inflows”, says Daniel Knoblach, General Manager of Super Global GmbH. The regulatory framework has also matured and proven its effectiveness.
“Companies are increasingly turning to credit funds as an alternative to traditional bank financing or they are integrating fund loans into their overall financing strategy”, says Knoblach. “This is particularly advantageous given that regulatory authorities have now established very clear guidelines.” For instance, it has been clarified that only banks and specialised funds are permitted to issue loans.
This shift is transforming the credit market, which has traditionally been dominated by banks. “Credit funds are emerging as a new go-to for corporate financing, frequently offering greater flexibility without increasing risk”, Knoblach states. However, similar to banks, regulators demand a high level of prudence, which is why not every capital management company is authorised to offer credit funds.
“Capital management companies must have a robust organisation in place to manage and oversee operations at every level”, says Knoblach. This encompasses all aspects of loan processing, ongoing monitoring and the handling of non-performing loans. “Additionally, effective early warning systems are essential to alert the company promptly if potential issues arise”, Knoblach adds.
Super Global GmbH has already launched several private debt funds as a capital management company. “We have the necessary infrastructure in place for both the fund launching process and for fund configuration”, Knoblach points out, highlighting the significant efficiency benefits this offers to fund initiators. “Moreover, this is an institutional business that demands a high level of professionalism from all parties involved.”
Clear guidelines and specifications are in place, which are crucial for effective risk management. “For instance, when launching and managing funds, we ensure that lending is free from conflicts of interest and that only a minimal amount of additional borrowed capital is employed”, Knoblach explains. Most importantly, it is made certain that no maturity transformation occurs, where, for example, short-term loans are used to finance long-term loans.
This approach allows for effective management of the risks associated with lending. “As a result, credit funds are becoming an increasingly attractive investment option for well-capitalised institutional investors”, says Knoblach. “We are currently witnessing the highest demand from large family offices and pension funds”, he notes, adding that “this market segment offers a genuine alternative to other asset classes and is particularly well-suited for diversification strategies.”