Specialty Finance Masterclass with Monachil Capital Partners Founder & CIO Ali Meli

https://www.atlalts.com/ - Our flagship pod, ATLalts, provides education, insights, and analysis of alts and private markets to RIAs and HNWIhttps://www.endurancestrategies.com/ - Learn, invest, educate and partner with us on alts, private markets, and non-traditional strategieshttps://sandate.substack.com/ - Check out my blog on asset backed financeYouTube Video of this episode: https://youtu.be/9OsDqg6bk1ghttps://www.linkedin.com/in/sandate/ - Connect with me on LinkedInhttps://calendly.com/sandate - Book time on my calendaremail me at [email protected] or [email protected] Meli is the Founder, Chief Investment Officer, and Managing Partner of Monachil Capital Partners. Since launching the firm in 2019, Ali has been at the helm of the firm's overall management, guiding strategic initiatives and spearheading investment decisions and capital raising activities.Prior to establishing Monachil, Ali spent 14 years at Goldman Sachs, where he spearheaded some of the firm's most notable and lucrative structured credit transactions. He most recently served as a Partner and Global Co-Head of Structured Finance, Investing and Lending ("SFIL"). His previous roles included European Co-Head of Principal Funding and Investments ("PFI"). Ali earned a Bachelor of Science in Electrical Engineering and Management Science from the Massachusetts Institute of Technology.On this episode of Asset Backed, Ali and I discuss a wide variety of topics which specialty finance investors, practitioners, fund managers, and industry participants will find interesting. Among the many topics Ali & I discussed in this episode:- His background and motivation behind forming the firm and launching his first fund.- Evolution of specialty finance from mid 2000s (Prosper, peer to peer)- The shift to and addition of smaller originators and the key drivers of their success and the magnitude of this change over the longer term- Why bank business models did not support these smaller originators and their gravitation towards larger credits and borrower relationships - Why smaller originators are interesting as an asset class and secular trends propelling this part of the credit markets (e.g. reduced cost of technology, AI, data driven decisioning), which could help them growWhy this episode? - Non-bank lenders and specialty finance companies across areas such as structured consumer finance, commercial finance, transportation, factoring and invoice financing, MCAs, and ABL require funding partnerships to make loans to customers. - Firms such as a Monochil provide capital to these niche but massive segments of the lending or credit markets where they have seniority, access to data, books, records, and controls as the senior, first-lien, first position lender.- Examples of niche credit markets aka specialty finance include non-bank consumer lending, SME and invoicing/receivables financing among many other sub-verticals within what is called specialty finance- Specialty finance is only just beginning to become familiar to wealth advisors and RIAs, which is one of the key reasons I launched this podcast and run a sister podcast called ATLalts. - Many RIAs have allocated to large direct lending strategies and stopped looking at additional opportunities to gain exposure in private creditWhy Specialty Finance?- It is less correlated to corporate sectors- Lending is moving away from banks- Banks used to have a monopoly on "lead-gen", "payment infrastructure", "servicing", "consumer data", and "funding". As these four "moats" are being democratized, barriers to entry are easing. - Funding is turning from a competitive strength for commercial banks to weakness (payment technologies are making them more flighty and elastic)- What 20 years ago was mainly possible through having a bank account, is now achievable with an investment account (you can simply link your debit card to your brokerage/wealth account)- Banks are not only losing their monopoly as the source of consumer financing, but also to manage savings for customers...no longer best option for either saving or lending arguably - All of this creates opportunity for investors to earn attractive risk adjusted returns with private credit firms like Monochil who specialize in lending to niche markets or industries and areas such as structured creditDisclaimer: Nothing contained herein is, or shall be relied upon as, a promise or representation as to the past or future. This conversation has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Viewers should not construe the contents of this conversation as legal, regulatory, tax, accounting or investment advice or a recommendation. Viewers should consult independent counsel, tax and financial advisors as to legal and related matters concerning any transaction.