BIGFI/Finance Seminar with David Robinson, Fuqua School of Business, Duke University

The Department of Finance and BIGFI is proud to announce the upcoming seminar with David Robinson, Fuqua School of Business, Duke University.

David Robinson will present: Why is Private Lending So Popular?

Abstract:
Non-bank lending to small- and medium-sized firms|i.e., private credit|has exploded over the past two decades.  To explore rise in its popularity, we focus on Business Development Companies (BDCs), which comprise a large fraction of the total private debt market and for which we can observe detailed information on portfolio investments. Although many have noted that BDC investments substitute for bank financing in the wake of post-crisis credit tightening, BDCs operate in meaningfully different ways from traditional lenders. BDCs do not merely make alternative bank loans: they offer a complex combination of securities to companies, spanning the debt/equity spectrum. This allows private lenders to tailor contracts to the risk profiles of individual firms.  The growth of the asset class is tied directly to this contractual complexity, which is associated with higher interest rates at the loan level but higher equity valuations and abnormal performance at the BDC-level. By blending lending with traditional private equity investments, the supply of capital is tailored to a growing retail investor segment.

Location:
Solbjerg Plads 3
2000 Frederiksberg
Room: SPs03