Institutional investors to favour alternative finance over coming years

A study from Amicus Finance finds that 73 per cent of institutional investors are predicting a growing institutional appetite for investing in the alternative finance market over the next two years.

Institutional investors believe that the sector will continue to offer attractive risk-adjusted returns. The research among European institutional investors reveals that they expect the alternative lending sector to grow by a quarter over the next 24 months, driven by the demand for expansion finance by SMEs.   
 
According to the study, almost three-quarters, at 74 per cent of institutional investors believe that growth of alternative non-bank finance could increase the resilience of the financial system by lessening the burden on banks.  Indeed, almost two-thirds, 64 per cent believe that UK and European small businesses are too reliant on traditional bank finance. 
 
John Jenkins, CEO of Amicus says: “As the economy continues to recover, institutional investors see a strong opportunity for the capital markets to play a bigger role in financing SMEs, which continue to face capital constraints due to bank deleveraging.”
 
Jenkins believes that institutions increasingly recognise they can generate attractive returns through investing in alternative finance without taking on large risks.  “We are seeing a high level of interest from investors looking for exposure to our short term bridging loans secured against UK residential and commercial property.”
 
Amicus defines alternative finance as crowdsourcing finance, peer-to-peer lending cashflow/invoice finance, property finance such as bridging loans and commercial mortgages or asset finance such as machinery and business equipment.