Capital flows continuously through the real economy. But it’s not as simple as money just moving from one place to another. We see capital as a chain, one that links people, businesses and investors to opportunity.
The strength of the chain determines whether assets get created, borrowers get the financing they need, and whether businesses can scale. Private credit plays an important role, holding all the links of the chain together. At one end of the chain, you have the users of capital that can include consumers who are making various kinds of purchases and those needs are real and constant. At the other end of the chain, we find investors that are looking for yield, diversification and stable returns.
Private credit sits in the middle, holding all those links of the chain together.
Here’s how the capital chain works. Let’s take the consumer. So folks like you or me want to go out and purchase a home or purchase a car. A loan originator gets the capital chain started, providing financing to that consumer so they can make that purchase. Then private credit steps in providing financing in the form of asset based finance to that loan originator so they can fund that loan. It works the same across multiple sectors.
In the energy transition sector, for example, it’s developers that are the users of capital. In the aviation sector, airlines, for example, asset based finance providers actually own the asset and lease it to the airlines, helping the airlines to solve their needs.
It’s really the same idea across all sectors. The names change, but the concept is the same. You’re creating asset backed financings and income generating assets that work well for investors.
