AIMA

The Alternative Investment Management Association

Alternative Investment Management Association Representing alternative asset managers globally

Hedge funds step up financing of the economy – new AIMA paper

06 May 2015

Hedge fund firms and other alternative asset managers are playing an increasingly important role in financing the economy, according to a new paper published by the Alternative Investment Management Association (AIMA), the global hedge fund association.

The paper says that private debt funds such as hedge funds now manage around $440 billion in assets, with some $64 billion of new capital allocated to the sector in 2014 alone. [1]

The paper finds that the most popular borrowers of non-bank private debt are small and medium-sized enterprises (SMEs). Such businesses are typically too small to raise capital through the public corporate bond market and have been finding it difficult to borrow from the traditional banking sector since the crisis. Refinancing existing loans, pursuing acquisition and expansion plans and improving working capital are all common uses of such private finance.

A number of case studies are published with the paper, including examples of private debt funds that have supported sectors as diverse as social housing, health, renewable energy and shipbuilding.

The sector still predominately comprises US-based funds, but European and Asian funds have grown significantly in prominence since the financial crisis, the paper says.

The AIMA paper also finds that private debt funds typically use little or no leverage and are structured in a way to prevent bank-style ‘runs’ or other systemic problems.

The paper, titled ‘Financing the Economy: The role of alternative asset managers in the non-bank lending environment’, has been produced by AIMA’s Alternative Credit Council, a committee of alternative asset management firms which are financing the real economy.

Its Chair, Stuart Fiertz, the President of Cheyne Capital, said: “Non-bank private debt financing, as distinguished from public corporate debt markets, has grown dramatically in popularity and volume in recent years. Buoyed by both increased demand from investors as well as a growing appetite from businesses for alternative sources of funding, these markets are starting to have a noticeable impact on economic activity.”

Jack Inglis, AIMA CEO, said: “This paper builds on our recent research in highlighting the ‘real economy’ impact of hedge funds. Our paper last year on the activities of hedge funds and other participants in the capital markets showed a clear correlation between capital market depth and economic growth. As this new paper shows, many small and medium sized businesses would miss out on growth opportunities or fail altogether if it were not for the absolutely vital support of hedge funds and other alternative asset managers.”

Mr Inglis added: “Special thanks are due to the members of AIMA’s Alternative Credit Council for their guidance and support.”

Ends –

Notes to editors

For media enquiries, please contact:

Dominic Tonner, Head of Communications, AIMA

Tel: +44 20 7822 8380

Email: dtonner@aima.org

About AIMA

The Alternative Investment Management Association (AIMA) is the global hedge fund industry association, with over 1,500 corporate members (and over 8,000 individual contacts) in over 50 countries. Members include hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms, investors, fund administrators and independent fund directors. AIMA’s manager members collectively manage more than $1.5 trillion in assets. All AIMA members benefit from AIMA’s active influence in policy development, its leadership in industry initiatives, including education and sound practice manuals, and its excellent reputation with regulators worldwide. AIMA is a dynamic organisation that reflects its members’ interests and provides them with a vibrant global network. AIMA is committed to developing industry skills and education standards and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) – the industry’s first and only specialised educational standard for alternative investment specialists. For further information, please visit AIMA’s website, www.aima.org.

 
 
Back to Listing

Main Menu

  1. Home
  2. About
    1. Our Core Objectives
    2. Meet the team
    3. AIMA Council
    4. Global Network
    5. Sponsoring Partners
    6. Opportunities at AIMA
      1. Communications Manager
    7. AIMA’s 25th anniversary in 2015
  3. Join AIMA
    1. Benefits of Membership
    2. Membership Fees
    3. Application form
  4. Members
    1. AIMA DDQs
    2. AIMA Annual Reports
    3. AIMA Governance
    4. AIMA Logo
      1. Policy note
    5. AIMA Members' List
    6. AIMA Review of the Year
    7. Committees and Working Groups
    8. Weekly News
    9. Update Profile
  5. Investors
    1. AIMA Investor Services
    2. AIMA Members' List
    3. Investor Steering Committee
  6. Regulation
    1. Brexit
    2. Key topics at a glance
    3. Asset Management Regulation
      1. EU Asset Management Regulation
        1. AIFMD
        2. European Capital Markets Regulation
        3. MiFID / MiFIR
        4. UCITS
        5. European Venture Capital Directive
        6. Shareholder Rights Directive
        7. European Long Term Investment Fund Regulation
        8. Loan Origination Funds
        9. Capital Raising
        10. AIFMD-Related Events
      2. US Hedge Fund Adviser Regulations
        1. Registration and Reporting
        2. Incentive-Based Compensation
        3. JOBS Act
      3. Asia Pacific Asset Management regulation
      4. Other Jurisdictions’ Asset Management Regulation
      5. Private Placement Regime
        1. Canada
        2. Dubai
        3. Finland
        4. Germany
        5. Hong Kong
        6. Japan
        7. Saudi Arabia
        8. Sweden
        9. United Arab Emirates
      6. Systemically Important Financial Institutions ('SIFIs')
      7. Remuneration
        1. UK
        2. United States
        3. CRD IV and CRR
        4. AIFMD
        5. MiFID
      8. Shadow Banking
      9. Volcker Rule
      10. Other
      11. Systemic Risk Reporting
      12. Dealing Commission
      13. Corporate Governance
      14. Securitisation
    4. Markets Regulation
      1. Algorithmic and High Frequency Trading
        1. EU Automated Trading
        2. US Automated Trading
      2. Benchmarks
      3. Capital Markets Union
      4. Derivatives/Clearing
        1. BCBS - IOSCO
        2. EMIR
        3. Dodd-Frank Act Title VII
        4. Hong Kong
        5. MiFID II / MiFIR - Derivatives
        6. Singapore
      5. Market Abuse
      6. MiFID II / MiFIR
      7. Position Limits
        1. MiFID II - Commodities
        2. CFTC Position Limits
      8. Recovery and Resolution
        1. EU
        2. CPSS-IOSCO
        3. Financial Stability Board
      9. REMIT
      10. Securities Settlement
      11. SFT reporting & transparency
      12. Short Selling
    5. Tax Affairs
      1. Automatic Exchange of Information (AEOI)
        1. FATCA
        2. EU - AEFI
        3. OECD - Global Standard on AEFI
      2. Australia - Investment Manager Regime (IMR)
      3. Base Erosion - Profit Shifting (BEPS)
      4. FIN 48 and IAS 12
      5. Financial Transaction Tax (FTT)
      6. UK Investment Management Exemption (IME)
      7. UK Offshore Funds Regime
      8. Other
    6. AIMA's Policy Principles
    7. Search
    8. Resources
      1. Guidance Notes
      2. Noticeboard
        1. AEOI: FATCA and other regimes
        2. AIFMD
        3. Algorithmic and High Frequency Trading
        4. Bank/Capital Regulation (including NSFR)
        5. BEPS
        6. CFTC Registration and Exemptions
        7. Corporate Governance
        8. Dealing Commission
        9. Derivatives
        10. FTT
        11. MiFID / MiFIR
        12. Other Hot Asset Management Topics
        13. Other Hot Markets Topics
        14. Other Hot Tax Topics
        15. Position Limits
        16. Trading
        17. UCITS
        18. UK Partnership Tax Review
        19. US State and Local Taxes
        20. Volcker Rule
      3. Hedge Fund Manager Training
      4. Quarterly Regulatory Update
      5. Webinar Programme
      6. Regulatory Compliance Association
        1. About the Regulatory Compliance Association
        2. RCA Curricula and initiatives for alternative investment firms
        3. Meet the regulators and Sr. Fellows
  7. Education
    1. Research
      1. AIMA Research
      2. Industry research
      3. Surveys
        1. 2016 Global Hedge Fund Survey with KPMG and the MFA
        2. Private Credit
    2. AIMA Journal
      1. Recent issues
      2. Search AIMA Journal articles
      3. AIMA Journal archive: 2010-2012
    3. '25 Years in Hedge Funds'
      1. Introduction - AIMA's global mantra
      2. How the hedge fund industry has evolved over the last 25 years
      3. How the regulatory landscape has changed for hedge funds
      4. Separating fiction from reality: The most common and persistent hedge fund myths
      5. The next five years - where is the hedge fund industry headed?
      6. Virtual roundtable - Leading figures from the hedge fund industry look ahead to 2020
      7. Learning the lessons from the past
      8. Accessing hedge funds: how ‘solutions’ are the new FoHFs
      9. 'Big data': The growth of the global hedge fund industry
    4. "The Case for Hedge Funds"
      1. Global Hedge Fund Industry Paper: The value of our industry
      2. The Value of the Hedge Fund Industry to Investors, Markets and the Broader Economy: Research commissioned by AIMA and KPMG
      3. The Evolution of an Industry: KPMG/AIMA Global Hedge Fund Survey
      4. Contributing to Communities: A global review of charitable and philanthropic activities by the hedge fund industry
      5. Beyond 60-40: The evolving role of hedge funds in institutional investor portfolios
      6. The Cost of Compliance: Global hedge fund survey by AIMA, MFA and KPMG
      7. Capital Markets and Economic Growth: Long-term trends and policy challenges
      8. Apples and Apples: How to better understand hedge fund performance
      9. The Extra Mile: Partnerships between hedge funds and investors
      10. Key articles by AIMA on the case for hedge funds
    5. AIMA Guides to Sound Practices
    6. AIMA guides for institutional investors
    7. Transparent, Sophisticated, Tax Neutral - The Truth About Offshore Funds
    8. CAIA Association pages
      1. Fundamentals of Alternative Investments
    9. Regulatory Compliance Association pages
      1. About the Regulatory Compliance Association
      2. RCA Curricula and initiatives for alternative investment firms
      3. Meet the regulators and Sr. Fellows
    10. Certified Investment Fund Director programme
    11. Services to Start-up Managers
    12. Glossary
    13. Cyber Security Resources
  8. Events
    1. AIMA Events
      1. AIMA's Global Policy and Regulatory Forum
        1. 2016 Forum
          1. 2016 Forum - Agenda
          2. 2016 Forum - Speakers
          3. 2016 Forum - Sponsors
          4. 2016 Forum Supporting Organisations
          5. 2016 Forum - Review
      2. AIMA Spotlight 2016
    2. AIMA webinars
    3. Industry events
  9. Media
    1. Press Releases & Statements
    2. AIMA's blog
    3. Media Coverage
      1. Articles by AIMA
        1. Archive
      2. AIMA in the news
      3. Video interviews
      4. Industry news
    4. Media Contacts
    5. Press Materials