Syndicated Scoop: Banks Maintain Control, Ares Capital Acquisition and More
This month's syndicated lending scoop: banks and control of loan market, a $3.4 billion deal and two blockchain leaders joining forces to streamline systems
13 June 2016
By Kylie Horner and Andrew Scolnic
Intralinks for Financial Services—Syndicated Scoop is a newsletter providing a recap of the month’s top stories and insightful commentary related to the commercial and syndicated lending industry. Read on for a quick summary of this month’s Syndicated Scoop:
- Banks set on maintaining control of loan market as new entrants struggle
- Ares Capital acquiring American Capital in a $3.4 billion deal
- Two blockchain leaders joining forces to streamline financial systems
This Month’s Syndicated Scoop
Banks set to maintain control of loan market as new entrants struggle
Despite the recent murmurs of marketplace lenders taking control of the greater loans market, a recent analysis by Deloitte shows that traditional banks are easily maintaining the greater market share within the industry. Given a ten-year time frame and reasonably rapid growth, Deloitte estimates that such marketplace lenders could only gain control of about six percent of the loans market across main segments, including personal lending and SME business lending. Neil Tomlinson, head of UK banking at Deloitte, explains that, while borrowers like the benefits of speed and convenience of marketplace lenders, those willing to pay a premium to access their loans quickly are a minority. Deloitte believes it’s only a matter of time before regular banks use their size to completely overtake and undercut marketplace lenders’ prices.
Ares Capital to acquire American Capital in $3.4 billion deal
Ares Capital Corporation and American Capital, Ltd. have recently entered into a definitive merger agreement under which Ares Capital will acquire American Capital, excluding American Capital’s mortgage management unit. This transaction enhances Ares Capital's position as the leading business development company in the United States and a leading direct lender to middle market companies. The combined entity will have a normalized portfolio value of $13 billion in investments as of March 31, 2016.
Two blockchain leaders might join forces
Two major players in the blockchain space are looking to become partners, as R3 CEV, a leading blockchain development group, may join with Ripple, a cross-border transfer firm. Blockchain technology, which is best known for powering Bitcoin and other cryptocurrencies, is gaining steam among finance firms because of its potential to streamline processes and increase efficiency. Its distributed ledger could simplify paper-heavy, expensive or logistically complicated financial systems. Ripple CEO Chris Larsen leaked this possibility that Ripple could want to partner with R3, as the latter has a proprietary ledger platform Corda that would integrate and expand Ripple’s exposure to more banks and increase security. Conversely, R3 could benefit from Ripple’s preexisting transfer structure. As the blockchain industry continues its immense growth, this move could solidify a major player in an already burgeoning field.