Alternative source of finance for industrial companies : case studies on direct lending

In a landscape where the banks are struggling to reach capital requirements due to heavy regulations imposed from the European Union, the space for the affirmation of alternatives increases. Banks have shifted their primary objectives from their main activity, lending to privates or corporates, towards financial and capital restructuring in order to meet the Basel Committee’s requirements. Perhaps the negative rates on deposits imposed from the central bank, the credit crunch created from the offer side still hasn’t stopped. The enterprises whom were for the most negatively affected from this credit insufficiency were been the small and medium ones, less structured, riskier and with not global market presence. This situation has evidenced a big demand of debt financing that couldn’t be satisfied if not from new actors. The regulation improvements, first in UK and then coming towards south through Europe has, for a while, limited the diffusion of new alternative sources of corporate financing. One of these, still developing largely now in northern Europe and recently born in the southern part, especially in Italy, is called Direct Lending. It’s the direct loan issuing from an entity which is either a Special Purpose Vehicle, Insurance Company or, most commonly, an Alternative Fund. This solution, as alternative with different characteristics to bank loans, is gaining a huge market share in the lending landscape, becoming nowadays centre of attention and reports. The thesis describes the positioning of Direct Lending within the corporate finance alternatives, it touches the regulations of the solution, the geographical development and the major players operating with the lending typology. It then continues with some case studies on how players position their offer, illustrating most of the operations, their characteristics and positive/negative aspects. Alternative sources of financing aren’t all defined yet, therefore there is also a focus on virtual currency schemes as alternative financing sources for companies, often within a local range, inside the network. Virtual currencies and their technology are a very actual theme which can’t be nowadays ignored as alternative for corporate finance, that can be seen as disruptive options.