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In addition to private funds, much of the capital for private debt comes from business development companies (BDCs). BDCs were created by Congress in 1980 as closed-end funds regulated under the Investment Company Act of 1940 to provide small and growing companies access to capital and to enable private equity funds to access public capital markets.
Direct lending is a form of corporate debt provision in which lenders other than banks make loans to companies without intermediaries such as an investment bank, a broker or a private equity firm. In direct lending, the borrowers are usually smaller or mid-sized companies, also called mid-market or small and medium enterprises , rather than ...
The reason behind the creation of CLOs was to increase the supply of willing business lenders, so as to lower the price (interest costs) of loans to businesses and to allow banks more often to immediately sell loans to external investor/lenders so as to facilitate the lending of money to business clients and earn fees with little to no risk to themselves.
Private credit funds and business development companies (BDCs) are positioning their portfolios to deal with a potential economic downturn, which will be the first real test for a market that has ...
Unitranche debt is a form of flexible financing, typically used to fund mid-size buyouts and acquisitions. Unitranche financing is structured differently from other loan types since there is only one tranche , rather than more traditional loans which may prioritize senior debt over subordinated debt .
Such debt is referred to as 'subordinate', because the debt providers (the lenders) have subordinate status in relationship to the normal debt. Subordinated debt has a lower priority than other bonds of the issuer in case of liquidation during bankruptcy, and ranks below: the liquidator, government tax authorities and senior debt holders in the ...
Private money investing is the reverse side of hard money lending, a type of financing in which a borrower receives funds based on the value of real estate owned by the borrower. Private Money Investing (“PMI”) concerns the source of the funds lent to hard money borrowers, as well as other considerations made from the investor's side of the ...
A vulture fund is a hedge fund or private-equity fund that invests in debt considered to be very weak or in default, known as distressed debt. [2] Investors in the fund profit by buying debt at a discounted price on a secondary market and then using numerous methods to sell the debt for more than the purchasing price.