(Reuters) – Citigroup launched a private lending vehicle in partnership with alternative investment manager LuminArx Capital on Thursday, looking to expand its footprint in a market that has attracted significant attention in recent months.
Heightened regulation has prompted traditional banks to reevaluate the loans they provide. They have responded by teaming up with private capital providers, that are not subject to the same degree of oversight as banks, and can afford to provide riskier loans.
Analysts expect the demand for such loans to pick up in the coming months as the market for mergers and acquisitions rebounds.
LuminArx will commit more than $2 billion for the private lending vehicle, known as Cinergy.
“The private lending market is experiencing transformative growth and we are pleased that Cinergy will enhance our ability to meet the capital needs of our clients,” Mitali Sohoni, head of asset-backed financing at Citi, said.
Last year, Wells Fargo also launched a fund in partnership with a private equity firm.
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(Reporting by Niket Nishant in Bengaluru; Editing by Shounak Dasgupta)