Opportunities Abound for U.S. Managers As European Regulators Relax Restrictions on Alternative Lending

Regulations enacted in the aftermath of the 2008 global financial crisis required banks in the U.S. and abroad to curb their lending practices, forcing small and middle-market companies to search for alternative forms of financing to manage and expand their businesses. These events spurred the growth of alternative lending, where non-banking institutions were eager to fill the credit void left from the retrenchment of banks. Although alternative lending has flourished in the U.S., the sector has taken longer to develop in Europe due to the web of local regulations that govern loan origination by non-bank lenders. Europe’s view and approach to non-bank lending, however, has begun to evolve, creating new opportunities for lenders, their investors and borrowers. To help our readers understand the rise of alternative lending in Europe and how U.S. managers can access lending opportunities in Europe, the Hedge Fund Law Report interviewed Jiří Król, deputy chief executive officer and global head of government affairs at The Alternative Investment Management Associated Limited, which is affiliated with the Alternative Credit Counsel. For more on hedge funds as direct lenders, see our three-part series: “Tax Considerations for Hedge Funds Pursuing Direct Lending Strategies” (Sep. 22, 2016); “Structures to Manage the U.S. Trade or Business Risk to Foreign Investors” (Sep. 29, 2016); and “Regulatory Considerations of Direct Lending and a Review of Fund Investment Terms” (Oct. 6, 2016).

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