Defining specialty finance

By: :: May 8, 2019

Recently I was a participant on the Specialty Finance Panel at iiBIG’s 2019 Private Debt Deal-Flow Summit. The core of the discussion focused on this statement: “Originations by hedge funds and private credit firms are finding success in increasingly narrow verticals. What should everyone know about the lending nuances and dynamics in these specialized markets?”

The first question was to really try and define what specialty finance entails. It is a broad category of non-traditional lending, and is often associated with under-banked asset classes such as consumer loans, including auto, but can extend all the way to energy or utility/project finance on the corporate end of the spectrum. Specialty finance is also a bucket under which “sin” categories often seem to fall: gambling, casino and the emerging marijuana sector. At CapX, we define specialty finance as the ability to help businesses that don’t fall into a traditional bank lending profile.

However you define specialty finance, what was agreed upon within the panel was that there are lenders looking for business in these sectors. With various lenders employing their own proprietary underwriting methods to assess risk, it becomes difficult for private equity, intermediaries, and direct sellers to determine what specialty finance company makes the best fit for their needs. At this time, most debt funds are under-deployed due to current supply/demand imbalance for corporate debt.

What’s the best fit for CapX? We provide equipment finance and term debt solutions to middle market companies seeking growth and liquidity, investing between $1M and $20M across manufacturing, distribution, technology, energy and healthcare sectors throughout the U.S. and Canada. With leading edge technology and quick turnaround, our experienced management brings value to every transaction. We welcome the opportunity to talk with you about your equipment finance needs.