Alternative investments strategies relying on limited bank financing appear to be well-placed to profit from the current crisis of confidence in the banking sector. And despite EU regulatory measures to deal with greenwashing, ESG products are seeing increased demand.
“The current crisis of confidence in the banking sector has triggered a certain slowdown in equity transactions in the fund sector,” said Christian Hertz, the managing director of FundRock LIS S.A., a subsidiary of the Apex Group in an interview. “Some smaller transactions, in particular, have difficulties finding financing.”
But any big change in the economic situation presents opportunities for those placed to take advantage of them. “Opportunities have also arisen, especially for debt funds which can act as lenders for players looking for new sources of funding,” he said. “Private debt strategies with limited leverage seem to benefit the current market conditions.”
Increased demand
Hertz said his firm has seen a number of new projects in this category of funds.
Luxembourg has seen “increased demand” for these private debt products, as well as growth in ESG and digital banking services, he explained.
He explained that ESG products have “continued to pick up sharply”, despite recent and expected regulatory developments clarifying and tightening the rules applicable to funds promoting sustainable characteristics or objectives.
Time to market
“Digital banking services are in high demand, especially to ensure swift bank account opening and general time to market,” he said.
Looking forward to the coming quarter and beyond, Hertz sees mixed developments.
“Fund raising takes generally longer than in the past, including for ESG products,” he said. “But the number of new projects does not seem to decrease on the alternative side.”
He warned that firms should not expect to rely solely on their successful track records. “Track records are a key element, but are no longer sufficient to ensure a swift fund raise.”
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