RiverNorth Capital Management filed with the SEC to create a new fund labeled RiverNorth Marketplace Lending Corporation. The investment fund will invest in consumer and small business loans originated via marketplace or peer to peer lending platforms. The fund will invest at least 80% of its assets into direct lending assets with the balance going into other securities. The emphasis is on generating current income.
RiverNorth is a Chicago based investment management firm that was found in 2000 their focus, according to their web site, is “strategies in niche markets where the potential to exploit inefficiencies is greatest”. RiverNorth believes the rapid rise of direct lending has “created a “relatively untapped and attractive investment opportunity, with a potential for large returns”. Marketplace lending leverages the efficiencies of the internet to undercut traditional financial firms in the in the loan making process. The direct lenders match individuals or institutions to SMEs and individuals seeking loans online. The better data, combined with the low cost, low friction, transactional approach has fueled a once small market that while measured in billions today, is expected to jump to trillions in the coming years.
This fund is said to be the first closed end fund to set up shop in the US to target direct lending assets and represents another step in the evolution of marketplace lending
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