Reuters Loan Pricing Corporation reports business development companies (BDCs), which extended share price gains this summer after a prolonged slump, still face hurdles that prime the specialized closed end investment funds for consolidation, according to sources.
The Reuters article notes that while BDC share prices are trading closer to book value, a majority are still at a discount, limiting their ability to raise fresh capital. Also, smaller platforms are at a disadvantage compared to larger ones in a marketplace where lenders are competing aggressively for assets and new money deal flow.
BDC total assets were roughly $84 billion in the second quarter of 2016 compared to $30 billion in the second quarter of 2012, Wells Fargo data show.
The Reuters article further notes that not only have the number of BDCs multiplied, but the field of alternative lenders has deepened, as more and more institutional investors allocate capital to the middle-market via a range of credit strategies, senior loan funds and direct lending platforms.
Read the Reuters article LPC: BDC Space Ripe for Consolidation.