🌊 $124B Institutional Capital Wave Targets Alternative Lending

Welcome to Advance Genie, weekly newsletter that helps operators in highly stigmatized industries find alternative financing methods.

Institutional investors poured $124 billion into private credit in the first half of 2025 alone.

Over 50% of new fund launches now target specialty finance and opportunistic credit. The strategies that fund businesses traditional banks reject.

Major pension funds, insurance companies, and asset managers are raising billion-dollar funds specifically to lend where banks won't.

Banks say frontier operators are too risky. Institutions say they're the opportunity.

The $124 Billion Wave

The numbers show a fundamental market shift.

Private credit fundraising hit $124 billion in the first half of 2025, 50% above H1 2024's $82 billion. 

The year is on pace to surpass 2024's full-year total of $215 billion.

But the composition changed.

Specialty finance and opportunistic credit strategies accounted for over one-third of all new fund launches in 2024, up from 21% in 2023. In 2025, over half of new fund launches focus on these strategies.

Translation: Institutional capital is flooding into the exact lending categories that serve frontier operators.

The validation comes from the top. CalPERS, the U.S.'s largest pension fund with $500 billion in assets under management, indicated a strong preference for asset-based financing as it plans to double its private debt allocation. 

Investment consultants including AON, Cambridge Associates, Mercer, and StepStone have all recommended specialty finance and opportunistic credit to clients as diversification tools.

This isn't opportunistic experimentation. It's strategic allocation.

Neuberger Berman: $1.6 Billion, 45% Already Deployed

In February, Neuberger Berman closed NB Specialty Finance Fund III at $1.6 billion, exceeding its original $1 billion target.

The fund is already 45% deployed.

Peter Sterling, Head of NB Specialty Finance, said: "The asset based finance market has experienced incredibly strong growth driven by regulation, innovation and evolving borrower needs."

The majority of institutional investors in Specialty Finance Fund II committed to Fund III, underscoring sustained appetite for the asset class.

45% deployment in less than a year means one thing: they're finding deals. 

Lots of them.

Aperture Investors: $1 Billion, Hiring Top Talent

In August, Aperture Investors launched its Asset-Based Finance Strategy, targeting $1 billion in initial commitments with seed capital from Generali Investments.

"Aperture offers the right foundation to build a focused asset-based finance strategy at a time when traditional lenders are retrenching and financing needs are becoming more nuanced," Turgeon said.

Traditional lenders are retrenching. Institutional capital is building permanent platforms.

With the launch of the Asset-Based Finance strategy, Aperture now manages more than $2.3 billion in committed capital across its alternative credit platform. 

The firm oversees approximately $5.2 billion in total assets under management and committed capital as of July this year.

The Pattern

Two funds. $2.6 billion raised in 2025 specifically for asset-based and specialty finance. Both backed by institutional capital. 

Both hiring experienced teams. 

Both deploying aggressively.

This is what market structure change looks like.

For context, 2024's largest first-time private credit launch was CCS Partners, which raised $4 billion in August 2024 for structured credit and asset-based finance. The trajectory continued into 2025.

When billion-dollar funds launch back-to-back targeting the same sectors banks avoid, that's not a trend. That's a market

The Deployment Surge

Raising capital is one thing. Deploying it is another.

The evidence shows institutions aren't just talking. They're funding.

AP Equipment Financing crossed the $1 billion threshold in receivable value for its managed portfolio in October 2025, marking a major milestone. 

Recent investments in technology and staff fueled the growth of the portfolio, which comprises borrowers ranging from small enterprises to national manufacturers and dealerships.

The Secured Finance Network's Q2 2025 Asset-Based Lending Index offers a snapshot of how the industry rebounded after a first quarter riddled with tariff challenges.

For banks, the combined sentiment score rose 7.4 points to 56.5, staying in neutral territory. 

For non-banks, the combined score rose into slightly positive territory, up 10.8 points to 63.3, illustrating cautious optimism for near-term improvement.

Total commitments for banks rose 1.1%. Total commitments for non-banks jumped 5.2%.

New outstandings for banks rose 6.5%. New outstandings for non-banks soared 47.4%.

47.4% growth in new outstandings in a single quarter.

"Despite broader economic challenges, the asset-based lending industry is healthy and optimistic," Gumbrecht noted. "We're seeing a surge in new deal activity, stronger renewal cycles, and stable portfolio performance, all of which position the industry to meet growing demand through the remainder of the year."

What This Means for Frontier Operators

When multiple billion-dollar funds target the same sectors, they compete for deals. 

Non-bank confidence at 63.3 means lenders are actively seeking opportunities, not waiting for operators to come to them.

Competition among lenders creates leverage for operators. Better rates, fewer covenants, faster approval, more flexible structures. 

The dynamic flips from "please lend to us" to "which partner fits our growth plan?"

How to Position

Institutions expect institutional-grade documentation. Clean monthly financials. Customer concentration analysis. Asset aging reports. Growth projections with realistic assumptions. Management team track records.

Operators who present institutional packages get institutional terms. The 47.4% deployment surge means lenders are funding. 

The question is who gets the capital first.

Early movers have the opportunity to capture the best terms while competitors wait for banks that won't approve.

How To Get Started Today 👇

Building something bold in a high-friction industry?

In a few guided steps, we’ll map your model to the right financing paths and show exactly what you can expect.

👉 Take the quiz