The ABSF Global Conference, hosted by DealCatalyst at the Royal Lancaster in London on Monday 24 November 2025, again brought together a great mix of structured and specialty finance originators, investors and service providers.
The agenda this year was as packed and varied as ever, with panels and keynotes exploring different funding sources and asset classes, the evolving regulatory environment and the challenges and opportunities for both new and established market participants.
Travers Smith's Head of Finance, Charles Bischoff, moderated a panel entitled "The Funding Landscape for Specialist Lender Platforms: Building Resiliency in Your Capital Stack", exploring how lenders are diversifying capital stacks, the role of forward flow and private credit, and how platforms navigate funding pullbacks while maintaining origination volume. These considerations are front of mind for many in the space, and Charles was delighted to be able to draw out some of our and the panel's experiences in navigating these issues.
Our key takeaways from the day included:
- The tension between early-stage funding vs future scalability: relationships remain key in early-stage financing, and funders continue to position themselves as strategic partners to early-stage participants in the specialty finance market. These early-stage funders remain conscious of the time and resource (including diligence) required to successfully implement early-stage financing to specialty finance market participants (particularly those new to external debt financing). They often expect to continue to achieve rights of first offer / refusal and exclusivity (and in certain cases, equity warrants) to justify this upfront investment. Originators and specialty lenders are, however, considering opportunities for scalability (including take-out financing) and a wider funding base at an earlier stage in their funding lifecycle than ever, and are mindful of the need for documentation in respect of early-stage financing to expressly allow for this funding to scale and co-exist with future financing solutions, including to take advantage of the institutional capital (and lower cost of funding) available to larger market participants. We expect to continue to see market participants focussing more closely on exit / refinancing flexibility when negotiating terms for early-stage financing, and for these conversations with institutional capital providers to take place at earlier stages of participants' funding journeys than before.
- Scaling to securitisation: scalability, ultimately resulting in access to the public securitisation markets, remains a key goal for many market participants, particularly those already making use of warehouse financing. Attendees noted that reporting and other operational obligations remain a significant burden not just in transactions in-scope for the securitisation regulations, but also in circumstances where financing products have been made available by multiple providers, each with their own reporting and other requirements. Although many participants continue to see extensive reporting obligations as a necessary evil (and indeed a required step on their journey to ultimately access the securitisation markets, where fulsome reporting is required by law), attendees continue to call for streamlined and simplified reporting obligations earlier in the financing lifecycle where possible to reduce operational burden on internal teams.
- Continued evolution of private credit: private credit funds are playing a greater role in specialist lending as increased bank regulation, market volatility, and technological advances continue to shape the landscape. Whilst banks generally may offer lower cost of funds overall, private credit funds may provide greater flexibility across asset classes and lifecycle, coupled with higher advance rates. Credit funds are increasingly leveraging technology, notably AI, to enhance their underwriting processes, and thorough due diligence on the underwriting processes of originators are an essential consideration for any lender when selecting funding partners. There remains a healthy level of competition between banks and credit funds, with the overall balance continuing to shift as capital availability and risk appetites evolve.
- Building resilience in the capital stack: alternative lenders have and will continue to seek broad pools of capital to diversify funding requirements in a volatile macro environment. Fortunately, the debt journey and business lifecycles of originators in the specialty finance space are excellent platforms for increasingly diversified capital stacks over time – more options become available as a business grows. For originators, the on/off-balance sheet split is a key ratio to get right as the business grows, and lender representatives on the panel were quick to point out their preference for originators to incubate new products on balance sheet before seeking to fund them externally. Finally, well-established hedging strategies complement the diversification of funding discussed throughout, and lenders will be keen to ensure originators are adept at minimising volatility risk before advancing further cash for growth.
- Off-the-run credit – high-yield or high-risk: niche collateral pools, non-traditional underwriting processes and bespoke legal structures – these were all terms used by the panellists to answer the question 'what is off-the-run credit'? Noting the specialty finance market doesn't cater for all business and products with bespoke funding requirements, certain segments of the lender pool are actively engaging new finance for asset classes such as inventory, technological devices and car finance for underserved customers. Access to borrowers in esoteric markets that are unlikely to receive funding from traditional lenders allows lenders to diversify outside of the more saturated specialty finance space. An even more enticing proposition for these lenders may be the yields that these loans can attract, given the relative scarcity of market participants involved. This can be an attractive proposition for those funders willing to take on the risk of sub-investment grade assets, difficult collateral valuation and less standardised (and less tested) legal structures.
- Adapting documentation and due diligence to evolving operational needs and risks: standardised templates and due diligence questionnaires (whether internal or made available by industry bodies) offer an initial framework for structuring and diligencing transactions, but may not always be sufficiently comprehensive to address (i) the requirements of increasingly complex and scalable funding models; and (ii) risks highlighted by recent well-publicised business setbacks and failures in the space. An originator desire to build resilience for future funding – and perhaps lender sensitivity to these events – both seem likely to lead to increased due diligence and reporting obligations on originators, and perhaps more frequent third party auditing on those businesses. This, many thought, may lead to weaker or less resilient businesses being restructured, sold or even run off, but fundamentally strong businesses would be able to continue as before (and may ultimately benefit from preparing for securitisation-style diligence and reporting earlier in their lifecycle).
