Capital Solutions, Explained
Capital solutions has evolved far beyond its origins in distressed debt. Today, it functions as a form of “direct lending plus”—pairing tailored outcomes for borrowers with the potential for strong, cash-yielding returns for investors.
What is Capital Solutions?
Capital solutions began in distressed debt and opportunistic credit investing, but has since evolved into a broad, largely private and often bilateral ecosystem. The defining feature is customization. Managers start with a counterparty’s objectives—timing, flexibility, or other constraints that traditional markets can’t meet—and design terms (collateral, covenants, liquidity controls, maturities) that directly address those needs. This toolkit applies across both corporate situations and specialized asset‑based financing (ABF) needs, where bespoke structures are often required to unlock value from complex or diversified collateral pools.
A few elements distinguish the strategy:
- A problem-solving orientation: This is not product‑first underwriting. Fit and flexibility come first, with terms tailored to specific business
- Diversity of approach: Investment teams’ varied backgrounds shape how they source opportunities and structure deals, broadening the overall opportunity set.
For institutional investors, the result is access to differentiated exposures and return profiles that sit outside of traditional credit markets while maintaining cash yields.
