Citi and LuminArx presented a financial instrument designed for use in the private lending market.

The mentioned tool, jointly launched by the banking giant and an investment manager, was named Cinergy. In this case, companies are offered a wide range of private credit solutions. The relevant information is contained in a joint press release from Citi and LuminArx.

Mitali Sohoni, Head of asset-backed finance at the specified bank, says that the private lending market is currently in a state of transformational growth. According to her, Cinergy will expand Citi’s capabilities to meet customer capital needs. Mitali Sohoni says that the new financial instrument, which is based on LuminArx’s execution capabilities and the industry experience of the company’s team of specialists, is a truly differentiated offer.

The press release notes that Cinergy will invest in various asset classes. The financial instrument can be used in the registration of commercial, consumer, and residential loans. Also, the new solution can be applied within the framework of corporate debt across the entire capital structure.

The press release notes that LuminArx and its global institutional partners intend to allocate more than $2 billion to support the operation of the mentioned financial instrument. The Citi Spread Products franchise intends to provide solutions to expand Cinergy’s investment potential.

Gideon Berger, co-founder and CEO of LuminArx, said that the launch of the financial instrument reflects the company’s commitment to implementing innovative investment solutions. He also noted that his firm is aimed at providing creative and individual opportunities to partners. In this case, financing opportunities are implied.

Gideon Berger says that there is currently a demand from investors for innovative and differentiated solutions that allow them to benefit from an increase in the volume of the private lending market. According to him, Cinergy is a means to achieve the corresponding goal. He also noted that this financial instrument is unique in comparison with other solutions of similar functional purpose presented on the market.

Currently, private lending or private debt is a way for businesses, particularly smaller Main Street businesses, to obtain the necessary capital. As part of these solutions, lenders have the opportunity to gain access to a market worth trillions of dollars. Currently, there is a tightening of the policy of traditional banks concerning underwriting and lending activities.

The Federal Reserve has recorded a decrease in lending to small businesses in the third quarter of 2023. The so-called new lending for the mentioned period decreased by 18.1% year-on-year. This figure is also 16.4% lower than the result for the second quarter of 2023.

Goldman Sachs, aware of the prospects associated with the specified trend, is seeking to double the volume of its $110 billion private loan business. Other Wall Street financial institutions are showing interest in trading loans themselves through secondary markets.

As we have reported earlier, Citigroup Fixes $1.8 Billion Fourth-Quarter Loss.