Asset-Based Finance Steps Into the Spotlight
Asset-based finance (ABF) is a broad and expansive market that can serve as a complement to traditional private credit. Jim Moore, Head of Private Placements and ABF, shares his views on how to define ABF, who is investing in it, and what makes it attractive.
Can you start by defining ABF and how the opportunity set differs from other private credit strategies?
ABF is certainly very topical, attracting attention from investors, managers and headlines alike—but the big question is how to define it. ABF is a broad label, with different managers and investors defining its boundaries differently. Unlike more clearly delineated markets like asset-backed securities (ABS) or public corporate credit, ABF spans a wide variety of collateral types and risk-return profiles.
At a high level, ABF is typically broken down into hard assets and financial assets across a variety of sectors. While hard assets are focused on tangible assets like equipment financing, digital infrastructure, aviation and mortgages, financial assets center more on pools of loans that aren’t tied to physical assets—like consumer or small business loans.
At Barings, we divide ABF into three main areas: residential, consumer, and commercial asset finance. From there the lens can widen or narrow.
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