Speakers on a panel discussing the capital structure of deals all seemed to embrace the shadow bank moniker, estimating that non-bank lenders have total assets of $75 trillion.
Alternative investment firms that are now in the business of providing financing for companies are part of the shadow bank world.
“Blackstone Group is the biggest shadow bank,” said Emanuel Friedman, CEO of hedge fund firm EJF Capital, who spoke on the panel Tuesday at the Milken Institute Global Conference in Beverly Hills, Calif. “We are also a shadow bank.”
However, in response to a question from panel moderator Michael Milken, chairman of the Milken Institute, Mr. Friedman said he wouldn’t want to buy a bank due to regulations.
When asked where they saw their firms in five years, the speakers said they were guarding against getting too big.
Jonathan Sokoloff, managing partner at private equity firm Leonard Green & Partners, said he doesn’t want his firm to become a “supermarket” with 20 offices and 20 investment strategies.
Mitchell Julis, co-founder and co-CEO of alternative investment manager Canyon Capital Advisors, echoed this sentiment. “Blackstone is one of the greatest alternative asset managers” with its assets under management growing at fast clip, Mr. Julis said. “We can’t be Blackstone.”
Mark Attanasio, co-founder and managing partner of Crescent Capital Group, said his firm has room to grow in part as a form of protection. “Firms like Blackstone and others are trying to push out smaller firms,” he said. “We would like to be larger to protect ourselves.”
One new possible strategy Crescent executives could add within the next five years is real estate, “for capital markets arbitrage.” Mr. Attanasio said.