Asset-based finance: what it is and why it is growing
Asset-based finance (ABF) is lending secured on a pool of assets, physical or financial, rather than on the creditworthiness of a company alone. It is one of the fastest-growing parts of private credit in Europe, and many investors see it as an alternative to classic direct lending. Here is what it is, why it is gaining weight and what it means for a private investor in Spain.
This text is educational. It is not investment advice.
Asset-based finance: what it is
In a classic corporate loan, the lender relies mainly on the company’s ability to generate cash. In asset-based finance, repayment rests on the cash flows and value of specific assets: loan portfolios, invoices, equipment, vehicles or real estate.
According to Janus Henderson (11 August 2026), ABF covers lending secured by pools of hard or financial assets. It tends to have shorter terms and to amortise as the assets generate cash.
The difference with direct lending is easier to see in a table:
| Aspect | Direct lending | Asset-based finance |
|---|---|---|
| What repayment relies on | The company’s cash and balance sheet | Cash flows and value of a pool of assets |
| Main security | The company and, sometimes, assets | The financed assets themselves |
| Monitoring | Company results | Performance of the asset pool |
| Complexity | Lower | Higher: needs legal structuring and collateral control |
A simple example, without figures: a lender finances a portfolio of consumer loans. If customers pay, the portfolio generates the cash that repays the loan. If they start to default, the investor depends on how the deal is structured and on what can be recovered. That is why the analysis focuses on asset quality and not just on the manager’s name.
Why asset-based finance is growing in Europe
Three reasons come up again and again in sector reports:
- Banks are lending less in some segments. Capital rules make certain portfolios costlier for them, so they sell them or finance them alongside investors.
- Much collateral is still not financed by private capital. Private credit managers hold under 5% of the ABF market, according to Janus Henderson.
- Investors want to diversify private credit. They look for exposure less tied to the corporate cycle.
Trends: what is happening worldwide and in Spain
- Europe, February 2026: Oliver Wyman estimates ABF at about EUR 4.2 trillion in Europe and says assets at leading private credit firms grew 38% over the five quarters to Q3 2025. Non-bank lenders would hold only 13% of the European total, against 34% in the US. These are consultancy estimates, not official figures.
- Worldwide, July 2026: in the Rede Partners report, 70% of the institutional investors surveyed see diversification beyond direct lending as the main trend for the coming year, and private credit makes up 18% to 20% of their private markets portfolios.
- US and Europe, first half of 2026: according to Octus, US direct lending fell 16% in the second quarter, with 1,112 deals in the half-year, while Europe held up with 494 deals (+4% year on year). The full detail is paywalled and other sources use different scopes. See another angle in direct lending in Europe in 2026.
- Spain, October 2026: the Observatorio de Financiación Alternativa con Colateral Hipotecario en España, with market analysis by PwC and legal framework by Cuatrecasas, puts alternative finance at 20% of the Spanish market, against 75% in the US and 50% in the UK, and expects mortgage-backed volume to rise from EUR 2,583 million in 2025 to EUR 3,891 million in 2026. More in alternative mortgage lending in Spain.
Figures do not always match across sources, because each measures a different scope: asset types, countries or investors. Compare numbers only when the definition is the same.
What it means for a private investor in Spain: private credit is diversifying towards collateral-backed structures. This is a trend, not a guarantee of results, and most of these strategies are designed for institutions.
Real assets as security: where real estate fits
A property is a physical, identifiable and registrable asset, so loans secured by a mortgage share the logic of asset-backed credit: the analysis centres on the value of the collateral and how capital is recovered. It is not the same as ABF on consumer or equipment portfolios, but the underlying reasoning is similar.
That analysis weighs the loan-to-value ratio (LTV), the valuation of the security and the exit plan. None of them removes risk on its own.
How Ondara works
Ondara Group is an alternative investment manager based in Barcelona, active since 2018. We structure private debt transactions secured on real estate, use real assets as collateral, analyse each transaction individually and seek diversification. Investors deal directly with the management team and the minimum investment is EUR 25,000. You can meet the team on who we are and see the group’s businesses on brands.
Risks to consider
All investing carries risk, including partial or total loss of capital. With asset-backed strategies you should also look at:
- Valuation risk: the collateral may be worth less than expected when it has to be sold.
- Default risk: the cash flows from the assets may deteriorate.
- Legal and structuring risk: a badly designed contract can make recovery harder.
- Illiquidity and term: capital is tied up until repayment.
- Complexity: these products are hard to compare and value for a non-professional investor.
Security mitigates risk but does not remove it.
Frequently asked questions
What does asset-based finance mean?
Lending secured on a pool of assets, physical or financial, whose value and cash flows support repayment.
Is it the same as direct lending?
No. Direct lending relies mainly on the borrowing company; ABF relies on the financed assets.
Why are investors looking at it?
Because it can diversify private credit and depend less on the corporate cycle, although it has its own risks.
Can a private individual invest in ABF?
It depends on the vehicle and your profile. Many strategies are aimed at professional investors, and the terms should be reviewed with an adviser.
Is a mortgage-backed loan ABF?
It shares the logic of asset-backed credit, but the term ABF usually refers to broader asset pools.
In summary
- ABF lends against assets, not just against a company’s creditworthiness.
- 2026 reports point to it as a way to diversify private credit in Europe.
- Market figures are third-party estimates and private managers still hold a small share.
- Collateral mitigates risk but does not remove it.
If you would like to know how we invest, register as an investor and we will explain how it works. The minimum investment is EUR 25,000.
This article is for information purposes only and does not constitute an investment recommendation or financial advice. All investments carry risks, including the possible loss of the capital invested, and past or target returns do not guarantee future returns. Analyse each opportunity with a professional before investing.
