Increasingly sophisticated fraudsters are relieving capital-raising projects of USD100,000s through fee-frauds, according to Private Debt Investor (PDI), which caters for private debt lenders including hedge, alternative investment and other private capital funds worldwide.
Research by the Project Finance Exchange (PFX) has revealed that the global private capital market has grown to USD20.35 trillion liquidity managed and allocated through over 125,000 funds worldwide (sources: Cap-Gemini, industry associations and institutions). But many of the private capital funds populating the market are now having their identities cloned and exploited by fraudsters who are cheating companies out of USD100,000s.
Private capital is having a growing impact on the global $multi-trillion ‘project’ finance market because only private capital can structure debt against revenues from yet-to-be-built assets such as renewable energy plants, hospitals, hotels etc. Banking regulations preclude mainstream banks from lending on these terms. Consequently, projects are now turning to private debt lenders in growing numbers and expect to pay due diligence, legal, survey and other fees as they progress towards their completed financing. And this is the open door at which a growing cohort of sophisticated ‘fee fraudsters’ is pushing.
Whilst private capital funds comply with all investor/consumer-side regulations across all jurisdictions, the market is regarded as akin to the ‘Wild West’ by many of those approaching the market for their project financing. It is this issue that self-regulation would overcome and also pre-empt the reputational damage that fee-fraudsters threaten.
