Informal private debt – A contribution to innovative corporate finance

Rainer Bizenberger

2008

In line with the private equity market and against the backdrop of more restrictive bank lending, a new private debt market segment has emerged: informal private debt. This involves direct sales of bonds and profit participation rights to a number of private investors. This new form of financing largely leaves banks out of the brokering equation for small and medium-sized business finance.

Rainer Bizenberger conducts a broad-based study of the various forms of informal private debt. He takes a look at the market segment's structure, processes and functionality. Rainer Bizenberger examines the suitability and design of informal private debt and its emergence as an innovative way for businesses to obtain financing. He provides the first-ever market overview of this part of the "grey capital market" and highlights key financing and marketing aspects of this novel business. He uses a real-life case to shed light on its background and goals. The author also looks into the future of this still nascent and fragile market segment.