Alternative Asset Lending Markets
Market Liqudity Matters For Alternative Assets
What can you borrow or lend against? Anything, if there is a willing market for the asset, with sufficient liquidity! This means the asset must be relatively stable in value, and be easy to sell to other parties. If these two components are present it makes it very easy to fund a deal.
Private lending is basically a term that defines a very broad range of private lenders, who will lend against various asset classes.
The beauty of private lending is we have the ability to create new financial products! By doing so, we are able to solve the liquidity requirements of businesses that others can’t.
Deal Funding Example
Most recently we had a client that had over $3M invested in a very niche asset class. The asset had a small marketplace, but was relatively strong. The asset also had good prospects for further increases in its underlying value due to certain market conditions.
The problem for our business client, was that there were no existing private lenders operating for that particular asset. More importantly they were in urgent need of liquidity to help their business grow.
Deal Engineering
Due to the intricacies of the asset class, and challenges in ensuring that a security position over the asset could be obtained, we spent over two months doing our DD. This was where the real work was done, in shaping the deal and where most would say “too hard.”
Family Office Funding (our value add)
Once we had comfort around the asset, a security position and market liquidity we then spoke to a Melbourne family office that back most of our deals. We were able to provide them with the evidence needed regarding their security interests, a safe LVR and a double digit rate of return that worked for both them and the borrower. You can read more of our alternative asset funding here.
Fundamentally we were to able to create liquidity for an illiquid situation! Where most parties would be frightened to enter or unwilling to learn the intricacies required to get the deal done, we were able to do so with ease.
