Deep dive on Alpha’s fund finance solution

Multiple market developments have been coalescing during the past 12 months or so, making the fund finance market an increasingly challenging and complex space for fund managers to navigate.

The lender landscape has undergone a major shift, with several of the largest banks that had traditionally been prominent providers of fund finance retrenching or leaving the market entirely. For funds, this means that capacity and cost pressures have multiplied.

However, demand for fund finance solutions has only increased. With exit horizons lengthening, coupled with a depressed fundraising market, fund managers’ need for liquidity solutions has risen dramatically.

On top of the widening supply-and-demand imbalance, economic factors including rising interest rates and inflation have added further pressure to both lenders and borrowers.

Taken all together, fund managers are struggling to source economically viable fund finance solutions that meet their liquidity needs.

In response to these challenging conditions, Alpha recently announced the launch of a new fund finance offering. Adam Heaysman has joined the group to head up the new division.

Innovative response
Commenting on his appointment, Heaysman explains: “Working in fund finance for the past two decades, I’ve seen appetite for fund finance grow considerably, but innovation in response to this has lagged behind. The result is that access to fund finance remains far too complex and restrictive versus what it could be in today’s environment. What excited me when speaking with Alpha was that they had already recognised this, and with their scale and track record of innovation already within the alternative investment market, had the firepower, technology and expertise to create the change that was needed.”

Alpha is well positioned to respond to the challenges currently faced by fund managers in this space. Through its alternative banking solution, the group has provided more than 4,000 accounts. “This gave us a really clear picture of funds’ borrowing needs,” says Sam Marsh, Alpha’s Institutional MD. “Alpha’s approach to the market has always been about listening to clients and developing the right solution, and we were increasingly hearing that access to fund finance was difficult, and comparing the market was unviable. This meant that even when clients obtained fund finance, they didn't really feel they could validate that they had the best solution for them, and were facing a time-consuming and resource-intensive processes.”

Considered connections
Alpha recognised it would not be able to be a sole provider of the volumes of liquidity demanded by fund managers, so instead it sought to find a solution it could dependably deliver, while also responding to market needs.

Says Heaysman: “What excited me when first meeting with Sam and the team was that their ambitions weren’t to create another fund finance adviser. They understood that advice was just a small part of the problem that clients face, and therefore their ambitions went well beyond this and were focused on creating a far more holistic and innovative solution for connecting funds to lenders.”

Combining Heaysman’s and his team’s expertise with Alpha’s alternative banking solution and Alpha’s origination platform, the group has created a powerful “modular” solution to support both fund managers and lenders at any stage of the fund financing process.

Marsh explains: “We have developed a holistic solution for fund managers and lenders, giving both parties a much more efficient way to connect. What we are effectively creating is a ‘debt marketplace’ where borrowers will be screened and matched against lenders that are right for them, and vice versa. From here, we have created a modular service offering for borrowers that will enable them to choose what level of intermediation they need and at what stages in the process, based on their requirements.”

Further details of the solution will be announced during the coming months. “We have already identified more than 200 lenders and profiled close to half of these, many of whom have capacity and appetite to lend. Based on our existing client base alone, we have more than 800 fund managers that will have instant access to our solution. Moving forward, we are looking forward to working closely with market participants on all sides of the equation as part of our insight-led innovation strategy in this space.” concludes Heaysman.

Want to find out more about Alpha’s innovative fund finance solution? The Drawdown is hosting, together with Alpha, a private dinner in London on 22 June, where fund manager attendees will have the opportunity to discuss the solution in more detail. If you would like to attend, please click here to register your place. 

This content was produced in association with Alpha Group