Working Capital Finance: Fund gaps, reduce supply risks.

Q: How does this asset class work?

Working Capital Finance is an asset class that has been around for centuries and is an essential component of global trade. It helps bridge the funding gap experienced by trade participants, allowing suppliers to collect early and buyers to provide partners with financing alternatives.

Q: Why Working Capital Finance now?

Banks traditionally dominated this market but regulatory changes from Dodd-Frank, Basel III, and now Basel IV, have constrained banks' balance sheets. These structural changes have resulted in a funding gap estimated at over 1.5 to 2 trillion USD which continues to grow.

Q: What are the characteristics of the Working Capital Finance strategy?

At O`Connor, we invest across global credit markets from investment grade through distressed, as well as short and long. We’ve now been investing in the strategy for over four years, developing relationships with key market participants and building out our franchise.

Q: What’s the potential impact of volatile markets?

Volatility tends to be a positive for the strategy as it generally means wider spreads, giving us pricing power. During stress, companies typically take a conservative stance and seek to shore up their balance sheets and increase cash levels.

Discover how Working Capital Finance bridges funding gaps, reduces supply chain risks, and supports global trade investments.

Working capital finance bridges the funding gap experienced by suppliers whose payment times for receivables have been extended and help the buyers to reduce supply chain risk. Roughly one-third of global trade flows are supported by some form of trade finance. Find out more about why investments in working capital finance are crucial and how O’Connor analyzes potential transactions.

What sets us apart

Core focus

We provide lending solutions to companies and assets owned by families and family offices and we have cultivated a sourcing network to supply us with opportunities.

Differentiated sourcing channels

In addition to our OCS network and more traditional sourcing channels, UBS Wealth Management and Investment Bank provide us with differentiated deal flow.

Experienced team

Our team has experience across the deal cycle from sourcing to closing. All senior team members have substantial restructuring experience.

Consistent investment process and risk management

From deal sourcing to execution, we actively monitor the portfolio and employ risk management until repayment.

The primary risk is payment default. We look to alleviate this risk via robust fundamental underwriting, utilizing the expertise and experience of our credit team. The secondary risk specific to accounts receivable financing is fraud. We try to mitigate this risk through structural protections and processes like invoice verification and assignment to identify malicious acts ahead of funding.

What is Working Capital Finance?

Learn how Working Capital Finance bridges funding gaps for suppliers, reduces supply chain risks for buyers, and supports global trade.

Get the full picture by watching the video.

Why Working Capital Finance matters

Working Capital Finance helps bridge global trade funding gaps.

Explore how O’Connor navigates this asset class, addressing market dynamics and risks with a diverse, informed approach.

Swipe through our Questions & Answers for more insights

Questions & answers

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How does this asset class work?

Why Working Capital Finance now?

What are the characteristics of the Working Capital Finance strategy?

How do we evaluate potential investments?

The process begins by working with origination platforms, all of which must pass our due diligence.
The team focuses on fundamental credit analysis to access the merit of each opportunity, and we also analyze the relative value of the opportunity versus the public debt and peer set.
If we believe that a potential transaction offers a compelling spread and yield pickup, we will do a full fundamental underwriting of the company.

What’s O’Connor’s edge?

O'Connor has extensive experience underwriting and investing in credits across the rating spectrum, which we have been doing as part of our multi-strategy for over 20 years.
We believe that our key differentiator is our ability to fundamentally underwrite the credit risk.
We use an open-architecture approach where we source from numerous originators spanning banks, platforms, and brokers, creating a larger funnel while giving us the ability to be more selective.

What’s the potential impact of volatile markets?

How do we navigate risks associated with Working Capital Finance?

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