Three quarters (73%) of institutional investors predict that there will be a growing institutional appetite for investing in the alternative finance market over the next two years as the sector will continue to offer attractive risk-adjusted returns, according to a study by Amicus Finance.
The research among 111 European institutional investors in May and June reveals that they expect the alternative lending sector to grow by a quarter (23%) over the next 24 months, driven by the demand for expansion finance by SMEs.
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According to the study, almost three-quarters (74%) 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%) believe that UK and European small businesses are too reliant on traditional bank finance.
John Jenkins, chief executive of Amicus said: "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.
"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."
Alternative finance includes 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.
Amicus, previously known as Capital Bridging Finance, acquired a 75% stake in Norton Folgate Capital Consulting LLP with the remaining 25% being held by the incumbent partners.
Most recently it had been reported that it was applying for a banking licence from the Bank of England.
