When a small or medium-sized business needs money, it usually goes to its bank and applies for a loan. This is how companies—not just SMEs—raise debt capital in Switzerland. Banks have, however, become more restrictive in their lending practices due to increasing regulation and higher capital requirements under Basel III. In this context, medium-sized companies and those without investment grade ratings are looking for alternative sources of financing. This is where private debt comes in. Renowned experts from academia and the financial industry shed light on how the market for this source of financing operates—and on what needs to be considered when engaging in that market—during our evening event yesterday, organized in collaboration with M&G at Zunfthaus zur Saffran in Zurich. 

With SFI Professor Rüdiger Fahlenbrach (EPFL), William Nicoll (Director Fixed Income, M&G), and Brian Olvany (Head of Private Debt, Zurich Insurance Group), a renowned expert group discussed the subject of private debt in detail. The discussion revealed that alternative sources of financing can indeed provide companies with an alternative to traditional banking lending. However, this form of financing is subject to its own laws, which must be taken into account by all parties involved, in particular requiring a high degree of expertise from the investor side. Companies that engage in such transactions must also be aware that private debt is generally not liquid and that investors are thus rewarded with a premium.

In the panel discussion that followed, moderated by Mark Dittli (Editor in Chief of The Market), the experts answered questions from the more than 100 participants and illustrated the subject with practical examples. As the event drew to a close, participants were invited to continue knowledge exchange with the experts and fellow participants during an aperitif, sponsored by SFI and M&G.