Arena Investors, Dan Zwirn's new private investment firm, is still in its brainstorming stage, writes McCann. With new COO and Head of Business Development, Marcel Herbst, Arena is looking at a "variety of options" in this space. Zwrin told McCann in an interview, "As more people move into what is typically referred to as 'shadow banking', the boom and bust cycles are only going to get more extreme. It's going to look more like when everyone made the initial jump into ABL funds. Conventional hedge funds often don't want to take on long duration. Duration often gets mistakenly conflated with illiquidity."
Zwirn went on to say that an opportunity for returns exists but investors who are seeking returns in specialty finance need an expert, rather than going in quickly, as there are blow up risks involved in shadow banking. He added, "Few people have the experience to understand all the different forms of non-bank specialty finance businesses."
