Direct lending may be entering new era

Challenges in the banking system are expanding the opportunities available to direct lenders. I believe the shifts we’re seeing won’t be short-lived, but, to borrow a phrase from Oaktree Capital Management Co-Chairman Howard Marks, may represent a sea change in private credit.

Direct lenders provide loans to businesses without using an intermediary. This form of private credit has grown dramatically in the last decade, with total assets under management rising nearly seven-fold since the global financial crisis of 2008 to reach roughly $800 billion by mid-2022, according to Preqin.

Private credit has become a popular alternative to syndicated bank loans partly because it can potentially offer more efficiency, certainty of execution, and flexibility.

Volta Finance Ltd (LON:VTA) is a closed-ended limited liability company registered in Guernsey. Volta’s investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its Shareholders through dividends that it expects to distribute on a quarterly basis.

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