PrivateCap Launches to Bridge Gap Between Institutional Investors and Equipment Finance Originators

In a significant development for the equipment finance industry, PrivateCap has announced its launch with the goal of unlocking new capital sources by connecting institutional investors to originators in the small and mid-market leases and business lease and loan market. This move comes at a time when capital markets are undergoing a global shift, presenting both challenges and opportunities for lenders and investors alike.

Founded by industry veterans Bill Phelan and Barry Ripes, PrivateCap aims to leverage their extensive experience in equipment finance and credit analysis to create a bridge between originators and institutional investors. This initiative could potentially reshape the funding landscape for equipment finance companies, particularly as traditional funding sources face increasing constraints.

The launch of PrivateCap is timely, given the current economic climate where banks are grappling with rising capital costs and concentration limits. Independent finance companies have traditionally relied on a limited pool of funding options, such as warehouse facilities and Asset-Backed Securities markets, which can be costly to access. PrivateCap's model seeks to introduce private sources of capital as a viable alternative, potentially reducing costs and increasing funding diversity for originators.

Barry Ripes, President of PrivateCap, emphasized the company's unique position, stating, "Our decades of experience conducting credit analysis on mid-market and small ticket leases and loans uniquely qualifies us to connect originators to institutional investors." This expertise could be crucial in establishing trust and facilitating transactions in what PrivateCap hopes will become a new asset class for institutional investors.

The implications of PrivateCap's launch extend beyond just providing an additional funding source. By creating a new avenue for institutional investors to participate in the equipment finance market, PrivateCap could potentially increase the overall capital available to the industry. This influx of capital could lead to more competitive rates and terms for businesses seeking equipment financing, ultimately supporting economic growth and development.

Bill Phelan, Chairman and CEO of PrivateCap, highlighted the company's vision, saying, "We intend to tell the remarkable story of the equipment finance market to institutional investors to create a new asset class of investments." This approach could not only benefit equipment finance companies but also provide institutional investors with new opportunities for portfolio diversification and potentially attractive returns.

The founders' background lends credibility to PrivateCap's mission. Phelan's experience includes co-founding PayNet, which maintained the largest proprietary database of small business loans, leases, and lines of credit before its acquisition by Equifax. Ripes brings expertise from his role as Financial Services Leader at PayNet and Equifax, where he worked closely with lenders, originators, and independent financial institutions.

As the equipment finance industry continues to evolve, PrivateCap's launch represents a potentially significant shift in how funding is sourced and distributed. By creating a more direct connection between institutional capital and equipment finance originators, PrivateCap could help streamline the funding process, potentially leading to more efficient capital allocation and improved access to financing for businesses across various sectors.

The success of PrivateCap's model could have far-reaching effects on the equipment finance industry, potentially inspiring similar initiatives and fostering innovation in financial intermediation. As the company begins its operations, industry observers will be watching closely to see how this new approach to funding impacts both lenders and borrowers in the equipment finance market.