Any funding market requires an equal measure of demand and supply. Data often focuses on the former, and rightly so, but who is providing the latter?

Nascent funding markets rarely narrow as they grow, and alternative financing is no exception. This year’s data show that borrowers in search of alternative funding most commonly tap private equity groups, asset managers, insurance firms and pension funds.

Every country has its own traits. In France, corporates prefer to borrow from asset managers, insurers and private equity firms. German borrowers most commonly source alternative capital from high-net-worth individuals, followed by private equity firms. Family offices play a vital funding role in family-focused Italy. Pension funds are often the first port of call for borrowers in Spain, but the opposite is true in Germany. The alternative funding mix is broadest in the UK and Benelux, where almost all forms of alternative funding can claim strong support from borrowers.

Drilling down, some alternative funding sources are growing in lockstep with the market – while others seem to be in retreat. Though it is difficult to make a meaningful year-on-year comparison due to the addition of private equity to the survey this year, it is striking that this source makes up 20% of the funding mix for corporates using alternative finance across the six jurisdictions polled.

Wider market data show that more capital was extended to European corporates by buyout firms in the full year 2015 than at any time since 2008, according to trade association Invest Europe.

As well as maintaining traditional equity strategies, private equity firms have evolved in the last few years to develop specific debt arms and hire fund managers in significant numbers who focus on direct lending amongst other types of debt finance.

Although it is the fund managers who are tasked with carrying out the credit assessment and marketing the funding, investors come from a range of backgrounds – including asset managers, private debt funds, pension and insurance companies – suggesting that the breakdown of investor types is more complex than first considered, making it challenging to establish a clear picture of the definitive sources of this capital.

While these funds have sometimes played a role in syndicated debt deals in the past, the move towards direct lending marks a significant development in the alternative finance space. This may explain the relative decline when it comes to larger and more traditional investment classes. Insurance companies made up 16% of the alternative funding mix in 2015, but just 9% this year. The same is true with asset managers (20% in 2015; 14% in 2016) and pension funds (13% in 2015; 10% in 2016).