Private Equity Wants Your Credit Card Debt. And Car Loan. And Mortgage.

Private equity firms such as Apollo, Ares, Blackstone, and KKR are expanding into asset-based lending, targeting the U.S. consumer. This form of finance includes auto loans, credit cards, mortgages, and loans backed by equipment. If private funds continue to grow in asset-based finance as they did in corporate lending, it could reach $900 billion in the next few years. Private funds are hiring teams to distribute asset-based finance to their investment clients, and they are also partnering with insurance companies and using complex instruments to buy risk from banks. The trend is still in its early stages, and banks still provide the majority of loans. However, private funds hope to capture about one-quarter of the estimated $25 trillion to $40 trillion asset-based finance market. The regulatory response to private credit has been mixed, and there are concerns about the potential risks it poses to the financial system. [Extracted from the article]