The scope of specialty finance (roundtable ‘Specialty Finance & Opportunistic Credit’ – part 1)

May 4, 2026

 

Chair: Jason Proctor, Troviq Private Markets Participants: Pascal Böni, Tilburg University   Egbert Bronsema, Aegon Asset Management   Robin Challis, Pemberton Asset Management   Lalantika Medema, PIMCO   Sachin Patel, Neuberger Berman   Srdjan Vlaski, StepStone Group

    

How do you define ‘speciality finance’ and ‘opportunistic credit’, and how do these categories differ from one another? To what extent do they differ from traditional private credit in terms of risk, return, liquidity and complexity?

Lalantika Medema: ‘When we compare speciality finance with other asset classes, I think the underlying risk is much more diverse. The category allows you to benefit from a wide range of segments – whether mortgages, car loans or credit cards – and from thousands of underlying loans, rather than a single company or property. To assess all those loans properly, a significant amount of data is required. In specialty finance, on an unlevered, loss-adjusted basis, the return potential averages in the high single figures, and with leverage it reaches double figures. In opportunistic credit, the leverage effect can also boost the return potential to double figures.’

Egbert Bronsema: ‘Thanks to this diversification in specialty finance, a portfolio with a wide range of opportunities can be constructed. This does not necessarily mean that there is no idiosyncratic risk, but nor does it necessarily imply a loss of return. Without leverage, stable returns can be generated that are generally higher than those of traditional assets, such as corporate bonds or direct non-bank lending. Furthermore, liquidity in specialty finance can be better than in direct non-bank lending and opportunistic credit.’

Srdjan Vlaski: ‘We define specialty credit across a range of sectors and structures, with a focus on lending secured by hard currency, financial assets and selected corporate loans, such as in healthcare, software and venture lending, where value is primarily driven by intangible assets. This encompasses a wide range of credit activities in the economy, including consumer credit, NAV loans, transport finance (including aviation and shipping), equipment finance and leasing – in short, all forms of lending secured by identifiable collateral. Generally speaking, private credit refers to more traditional, cash-flow-based corporate loans, whilst specialty credit is characterised by asset-based underwriting, structural protection and risk mitigation focused on collateral.’

Robin Challis: ‘When people think of opportunistic credit, they often think of distressed assets. These are bonds or loans traded at 50% of face value, but the opportunistic credit market is much larger than that. In times of stress, we look at loans in performing companies where syndication has failed and we may be able to take over the loan at around 90% of face value. In addition, in stable markets we look at loans to companies that need a flexible solution, for example by combining a first lien with an equity position. We seek the best relative value across the cycle. If you were to look only at distressed assets, there would also be long periods when there might be nothing to do.’

Are there sectors in specialty finance or opportunistic credit that have become mainstream in the institutional investment world, or are they set to become so?

Bronsema: ‘You see that more and more institutional investors are embracing the market (again), simply because of the nature of the financing: namely that of the real economy, i.e. the financing of small and medium-sized enterprises and consumers. Moreover, the financing can also be specifically tailored to their ESG policies, where the financing is directed at specific companies or specific sectors within their ESG framework, for example impact loans. This has become more mainstream.’

Pascal Böni: ‘Financing based on intellectual property rights is, I believe, on its way to becoming more established, alongside insurance-linked financing and litigation financing. These are broad forms of specialty finance. What I also see emerging is data centre or digital infrastructure financing, driven by the significant AI demand for infrastructure. It is very difficult to assess the risk of these financing transactions, as there is very little data available. When it comes to the systematic risk of credit funds – that is, their exposure to benchmarks – we have only recently begun to understand the returns of private credit funds a little better. More empirical research is needed.’
 

The opportunistic credit market is much larger than just distressed assets

 
Sachin Patel: ‘Most of the assets mentioned have been mainstream for a very long time. Loans have been granted to consumers, to small and medium-sized enterprises, for cars, and so on, for decades. For the most part, these are very common asset classes. The only real structural change is that the banks were the institutions that held the origin of these assets and financed them via their balance sheets, from which they have now disappeared. So it is not the case that a new type of credit product has been created that never existed before. I think the majority of the assets are very mainstream. Only a minority would I classify as a new type of investment, and these include data centres, simply because there is a lack of track records. The structural trend whereby assets are shifting from banks’ balance sheets to non-bank lending has continued at a steady pace, driven by regulatory constraints. At the same time, the banks have changed their approach. Now you see the major banks buying entire loans based on future cash flows, almost in direct competition with non-bank lenders, although they focus strongly on the prime segment of the market. Broadly speaking, I think the assets are very standard and traditional; for the most part, they are not particularly exotic or new. But the investor base has evolved, from opportunistic to what I believe is now very mainstream.’

 

Jason Proctor Jason Proctor is a co-founder of Troviq and a member of the company’s investment committee. Throughout his career, he has focused on investments in private market funds, co-investments and secondary markets, and previously worked at StepStone and Partners Capital.

  

Pascal Böni Pascal Böni is Professor of Practice in Finance & Private Markets at the Tilburg School of Economics and Management, and Managing Director of the Tilburg Institute for Private Markets (TIPM). He is also Associate Professor of Finance at TIAS and sits on several boards of directors, including that of the Swiss Association of Securities Firms. He obtained his PhD in Finance from Tilburg University.

  

Egbert Bronsema Egbert Bronsema is a Senior Investment Manager in the European ABS team and has been with Aegon Asset Management since 2016. Prior to that, he spent 11 years working in the Structured Finance team at IMC Asset Management. Bronsema has been active in the sector since 2005 and holds a Master’s degree in Business Economics and Quantitative Economics from Maastricht University.

  

Robin Challis Robin Challis is Deputy Head of Portfolio Management and Portfolio Manager for the European Strategic Credit strategy at Pemberton Asset Management. He is also a member of the firm’s Credit Review and ESG committees. Before joining Pemberton in 2016, he was Head of Credit Strategy for the Special Situations team at RBS. He began his career at KPMG in London.

  

Lalantika Medema Lalantika Medema is Executive Vice President and Alternative Credit Strategist at PIMCO, responsible for credit alternatives and strategies relating to mortgages and real estate. Previously, she worked in the portfolio management team, focusing on mortgage-backed securities and residential loans. Before joining PIMCO in 2006, she worked at Deutsche Bank, where she specialised in collateralised debt obligations (CDOs).

  

Sachin Patel Sachin Patel joined Neuberger Berman in August 2022 as Managing Director of the Specialty Finance team. Prior to that, he established the Global Capital Markets group at Funding Circle Holdings Plc. Before that, he worked in the Insurance & Pensions ALM Solutions division at Barclays Capital. Patel began his career in the cross-asset structured products division at JPMorgan. He holds an MPhys in Physics from the University of Oxford.

  

Srdjan Vlaski Srdjan Vlaski is Managing Director of the private debt team at StepStone, where he focuses on specialist finance credit strategies and secondaries. Vlaski holds a Master’s degree in Finance from the University of Lausanne and is a Chartered Financial Analyst (CFA).

  

Read the full report in Financial Investigator magazine