The rapid growth of asset-based finance (ABF) has captured the attention of the private credit world, but capitalising on these opportunities requires specialised expertise as well as a stronger operating infrastructure capable of supporting complex ABF portfolios at scale, explains Kanav Kalia, managing director, Oxane Partners.
Asset-based finance (ABF) quite simply, is too big to ignore any longer. At one point, this was considered a niche segment of private credit, but its rapid growth has made it one of the fastest-growing areas in the ecosystem. In fact, this has now been estimated to be an opportunity set around $20tn (£14.8tn) in size. But as ABF scales, the conversation is no longer just about the size of the opportunity. It is increasingly also about the expertise, operating model and infrastructure needed to access it effectively.
ABF has not just grown in scale, but has also expanded in scope and become more sophisticated. Today it spans a broad range of collateral types, including receivables, equipment, royalties, mortgages and specialty finance assets. ABF is also no longer episodic or purely opportunistic. It is now a mainstay in private credit portfolios with deal activity running on a steady cadence.
ABF has become an institutional, repeatable market rather than a dislocation-driven one. It no longer operates on the fringes and now commands much more consideration from private credit allocators. As the market matures, developing a strong understanding of how ABF is evolving, and the operational demands that come with that evolution, is becoming increasingly crucial for investors seeking to access the opportunities its growth presents, particularly as the demands around monitoring, servicing, valuation and reporting continue to increase.
The growing nuance of ABF
ABF is growing at a phenomenal rate, but its scale is not coming from one uniform market, but instead from multiple specialised pockets of opportunity. Growth is increasingly shaped by the underlying financing needs, becoming more surgical than broad, as money flows into defined, structured use cases rather than generic asset pools.
As competition grows, a greater onus is being put on how lenders can access these opportunities and what they bring to the table. Structured credit skillsets are increasingly being applied to private, non-securitised ABF opportunities. Like a lot of areas in private credit, this makes ABF attractive not just for its size and diversification benefits, but for its ability to support differentiated strategies.
As ABF continues to evolve, sector-specific expertise is becoming a key determinant of which opportunities lenders can access. In practice, that means firms without expertise are increasingly partnering with specialist providers, reinforcing the importance of domain knowledge and operating capability in accessing the market effectively.
Becoming a core allocation
All of this is pushing ABF from the fringe toward a core allocation in most private credit portfolios. Instead of a satellite holding, ABF’s scale, diversification, resilience and asset-backed downside protection has made it much harder to ignore. The market is seeing growing alignment between origination scale, capital formation, and long-term investor appetite.
However, such a significant change in fortunes for ABF can create unintended consequences. More private credit firms are allocating more resources to ABF, but achieving scale brings operational complexities that are neither easy nor cheap to address. The challenge is no longer just sourcing ABF opportunities but managing them effectively as the market matures and expectations around portfolio oversight, valuation, transparency and regulatory scrutiny continue to rise.
Eligibility criteria, borrowing base mechanics, covenant structures and reporting cadence all require high operating discipline, requiring private credit firms to overhaul existing infrastructure. As ABF portfolios scale, this also exposes the limits of fragmented workflows and narrow point solutions. What is increasingly needed is more connected infrastructure to support monitoring, reporting, control and transparency across the complexity of ABF.
Taking ABF to the next level
The ABF opportunity is clear and immense but successfully accessing these opportunities is another matter. Not only will real scale of resources be required to make progress in ABF, with origination depth set to become a real differentiator, but the intricacies of this asset class cannot be overlooked. The rapidly evolving nature of the industry also raises interesting questions about each party’s specific responsibilities. For instance, how can institutions participate in ABF with transparency and control? What role will banks and institutions play as ABF continues to scale? And what operating model can support repeatable growth without losing oversight?
It is clear the next phase of ABF growth will be defined by execution discipline, not just capital availability. Firms will need infrastructure that can handle asset diversity, structured cashflows, and portfolio-level control at scale. In ABF, that challenge is particularly acute: the operating demands of monitoring heterogeneous assets, managing recurring reporting requirements, and maintaining visibility across complex structures quickly outgrow fragmented workflows and point solutions. Technology becomes essential not simply to improve efficiency, but to standardise oversight, improve transparency and support faster, better-informed decision-making. In this sense, infrastructure is increasingly becoming the enabler of scalable participation in ABF.
This is why the role of specialist technology providers is becoming more important as the market matures. As institutions build for the next phase of ABF, they are increasingly looking for operating infrastructure that is purpose-built for ABF’s complexity, rather than adapting tools designed for adjacent markets. At Oxane, this has informed the development of Oxane Panorama over the last decade, which is designed to support ABF’s bespoke requirements around transparency, control, monitoring and reporting in a way that is scalable and repeatable.
Standing out in ABF
The good news is that, as ABF continues to scale, it is becoming a broad-enough opportunity set for more investors and firms to participate. But doing so demands a real understanding of the resources, complexity and operating discipline this asset class demands. Managing ABF requires a blend of domain expertise and technology, and the firms that build a competitive edge in this space will be those that invest in operating infrastructure as a key differentiator and enabler of success.
This is promoted content published in partnership with Oxane Partners.
