Private debt as booster for the development of real economy

The changes brought about by the energy transition, the digital economy and the development of new technologies will profoundly affect our lives, but they have costs that must be financed with resources that are often hard to come by, not least because of tight public budgets.

In this situation, private debt funds are instrumental to quickly and efficiently channel capital and savings to the new needs of the economy. Their mission is to find investments in debt securities in sectors that are less liquid and therefore more difficult for banks to finance. Alternative debt funds or private debt funds have supported economic and production system development by directly financing corporates with structures and maturities that are not directly practicable for the banking system. They finance real estate and infrastructure projects and facilitate the acquisition of illiquid loan portfolios comprising consumer credits, corporate bills and bad debts such as NPLs by increasing their liquidity and lowering their cost.

The IMI Corporate & Investment Banking Division works in close contact with private debt funds. In particular, the Division’s role is to originate investment opportunities for funds using its network of clients; structure securitisations with various types of underlying assets, leveraging its knowledge of the objectives of investors in the sector; finance at a senior level the funds' acquisition of specific assets or portfolios of assets; and directly finance the funds through Subscription lines (lines guaranteed by the commitments of the limited partners) that allow them to more flexibly manage the liquidity required for new investments.

In this talk, Federico Schlesinger, Head of Asset Management Insurance & Government, IMI Corporate & Investment Banking Division, explains how the development of this market promotes capital allocation and growth in the economy.