Private Debt funds and Closed–ended Loan Collective Investment Entities [CLCIE]

Private Debt funds and Closed–ended Loan Collective Investment Entities [CLCIE]

Abstract:

Alternative financing, understood as non–bank financing, significantly thrived after the great global financial crisis from 2007 as a response to the banking credit crunch and as a means to fix the excessive bank dependance companies faced. In this context, private debt – which until then was just an extension of private equity transactions – progressively earned its own identity as a new private and alternative asset class together with private equity.

However, the so–called “Private Debt Funds” have been lacking their own regulatory
framework in Spain until the enactment of Act 18/2022 on company foundation and development, which has amended Act 22/2014 on private equity entities. Such Act 18/2022 has, inter alia, created the concept of Closed– ended Loan Collective Investment Entities (CLCIE), which is not incompatible with other legal concepts that have so far offered a legal coverage to Private Debt Funds.

This article dives into Private Debt Funds and briefly assesses the diverse legal concepts
under which non–bank financing has been traditionally made available to corporates. In
particular, it focuses on the analysis of the new CLCIE and their regulatory framework in Spain.

Keywords: alternative investment, alternative financing, private debt, alternative debt, close– ended collective investment.