Defining and Capitalizing on the ABF Opportunity
Asset-Based finance (ABF) is gaining traction across private credit. In this Q&A with Private Debt Investor, Jim Moore, Head of Private Placements and ABF, shares how the market is evolving and why ABF is becoming a strategic focus for investors.
What is ABF and how does it differ from other private credit strategies?
ABF is a broad label, with different managers and investors defining its boundaries differently. Unlike more clearly delineated markets such as asset-backed securities (ABS) or public corporate credit, ABF spans a wide variety of collateral types and risk-return profiles. It’s typically broken down into hard assets and financial assets
Hard assets focus on tangible items such as equipment financing, digital infrastructure, aviation, and mortgages. Financial assets centre more on pools of loans not tied to physical assets—like consumer or small business loans.
Barings divides ABF into three main areas:
- Residential (e.g. residential mortgages)
- Consumer asset finance (e.g. credit cards, auto loans/leases, small business loans)
- Commercial asset finance (e.g. equipment finance, transportation, digital infrastructure, fund finance)
From there, the lens can widen or narrow. The opportunity set is not limited to securitised credit, even though that’s a core component. It also includes asset-based loans (ABLs), whole loans, project finance, and other secured structures with similar attributes.
One of ABF’s strengths is its breadth of risk-return profiles, ranging from AAA down to equity. Importantly, ABF complements other private credit strategies by offering diversification from corporate credit risk. Unlike private placements or direct lending, which are fundamentally corporate-risk focused, ABF centres on collateral and cashflow behaviour rather than traditional corporate financials alone.
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