Private Markets and Private Debt: Insights into a Misunderstood Asset Class
Have you ever wondered what private market investments are and what opportunities they bring?
In our latest podcast episode, we delve into the fascinating world of Private Markets (private market investments), Private Equity (investments in non-publicly traded companies), and Private Debt (bonds not traded on a stock exchange). We had the pleasure of welcoming Fabian Lehner from swisspeers as our guest. Fabian brings over 15 years of experience in wealth management and shares his valuable insights into an often misunderstood asset class – the world of private market investments.
Swisspeers: The Bridge to New Financing Opportunities
What is wisspeers? Swisspeers is a platform that allows private investors to directly invest in SMEs. It offers a variety of Private Debt solutions, including Direct Lending and Marketplace Lending. These direct investments not only provide financial benefits but also an emotional connection, as investors know exactly where their money is being used.
Our guest, Fabian Lehner, is Head of Investor Relations and Business Development at swisspeers. His career in banking and wealth management, as well as his personal journey into the world of private markets, make him an ideal interview partner.
Fabian shares his first encounters with Private Equity during his banking apprenticeship in 2004 and later experiences with Facebook's IPO in 2012. His interest was sparked by a study trip to Asia, which provided him with deeper insights into growth capital and venture capital.
Private Markets and Private Equity
Private Markets encompass investments that are not traded on public exchanges. This includes Private Equity, which involves investing in the equity of non-publicly traded companies. These forms of investment offer unique opportunities and risks that are often overlooked.
Challenges and Opportunities
One of the biggest challenges for private investors is access to these markets. Traditional banks are often unable to provide suitable solutions, leading to a market gap. Platforms like swisspeers offer a valuable alternative.
Private Debt: An Alternative Financing Form
Private Debt is an alternative form of corporate financing where the loan is provided not by a bank but by an investment fund, pension fund, or family office, for example. This form of financing has gained importance since the 2008 financial crisis, while traditional corporate loans from banks have lost significance. Unlike the public market, Private Debt instruments are typically illiquid, and lenders intend to maintain their commitment until the end of the term.
Capital Structure in Private Debt
In corporate financing, there are different forms of capital structure that vary according to the needs of the company and the requirements of investors:
Senior Loans: Senior loans are repaid before other forms of debt, usually have lower interest rates, and higher security.
Junior Loans: Junior loans are repaid after senior loans, have higher interest rates, and come with higher risk.
Unitranche Loans: A combination of senior and junior loans, a single credit facility with features of both types.
Mezzanine Capital: Positioned between equity and debt, often in the form of convertible bonds or subordinated loans.
Equity: Capital invested by the owners or shareholders, offering profit opportunities and risk of loss.
Practical Tips for Private Investors
Private investors can invest in SMEs through platforms like swisspeers and benefit from attractive returns. These direct investments not only offer financial advantages but also an emotional connection, as investors know exactly where their money is being used.
Gold Status for UMushroom Customers
How can you invest with swisspeers? As a UMushroom customer, you receive exclusive gold status at swisspeers for one year, benefiting from significantly lower fees and higher returns on your investments from the start.
Conclusion
Private Markets, Private Equity, and Private Debt offer exciting opportunities beyond traditional asset classes. By informing yourself and exploring new paths, you as a private investor can benefit from these opportunities while understanding and managing the risks.
*Direct Lending: Direct lending is an alternative form of credit financing. Unlike loans from traditional financial institutions, a direct contractual relationship is established between the lender (investor) and the borrower (company/SME). Thanks to the direct relationship, both parties benefit from better terms. Direct lending is its own asset class and a subcategory of Private Debt.
**Marketplace Lending: Marketplace lending is a term for various forms of lending via online platforms. It includes peer-to-peer lending (P2P lending), where individuals lend to other individuals, as well as crowdlending, where multiple investors jointly finance a loan. In marketplace lending, companies or institutional investors can also act as lenders.
