In this edition of the ION Influencers Fireside Chat, Ian Fredericks, CEO of Capital Solutions (Americas) at Hilco Global, cut through the noise surrounding Asset-Based Lending (ABL) . While private credit grabs headlines, Fredericks argues that ABL—with its historical 1% loss rate—remains the most secure, misunderstood, and strategically vital corner of the lending world.

A former corporate bankruptcy lawyer turned CEO, Fredericks brought a unique, cycle-tested perspective. Here are the key topics discussed.

1. The Lawyer’s Edge: Why Insolvency Experience Matters

Fredericks started his career at law firms Young Conaway and Skadden Arps, representing debtors in bankruptcy. That background, he says, is “highly relevant” to his current role. Why? Because most lending issues—from underwriting to workouts—ultimately play out in or around insolvency proceedings. Understanding the process from the debtor’s side gives him a critical edge in structuring loans that can survive a crisis.

2. The 1% Loss Rate: ABL’s Unbeatable Selling Point

When asked why ABL belongs in an investor’s portfolio, Fredericks was direct: historical loss rates of approximately 1% across decades of data (source: Secured Finance Network). ABL lenders underwrite to asset value, not just cash flow. They lend within that value, meaning they can work themselves out of trouble. Compared to cash-flow lending (e.g., to tech companies), ABL offers reasonable returns with significantly lower historical risk.

3. Institutional vs. Retail: A Growing Divide

• Institutional investors: They recognize ABL as a hot, diversifying space but are becoming more cautious due to general “private credit” noise. They are selectively looking for the right managers.

• Retail/wealth investors: Fredericks struck a cautious tone. He believes there is a “big educational gap.” Retail investors often don’t understand ABL’s nuances or illiquidity risks. Recent redemption stories in private credit, he warns, stem from this lack of understanding. His verdict? ABL may not be suitable for most retail investors unless they have a very long-term view and proper education.

4. The Education Roadmap: Start With SFNet

What is the best way to learn ABL? Fredericks, an executive committee member of the Secured Finance Network (SFNet) , pointed to their website, specifically the “defined terms” section. It contains hundreds of entries, from “borrowing base” to “asset-based lending” itself. He recommends it as the single best free resource for anyone wanting to move beyond headlines.

5. Cycles, Cracks, and Fraud: Where Are We Now?

We are in an unusually long credit cycle dating back to the 2008-09 financial crisis. While ABL has withstood retail apocalypses and COVID, Fredericks sees warning signs today:

• Shrinking spreads and a rise in fraud (citing names like Tricolor and First Brands).

• When markets get “frothy,” underwriting standards relax.

• The takeaway: ABL holds up well, but current cracks are real. Unlike cash-flow lending (e.g., to AI-driven tech firms), ABL benefits from periodic collateral reappraisals (often annual) and borrowing base triggers.

6. COVID as a Case Study: Why Asset Values Rarely Crash

Fredericks provided a masterclass on asset resilience. During COVID:

• Machinery & equipment: Values briefly went to zero (no enforcement happened), then spiked due to supply chain disruptions, then slowly normalized.

• Retail inventory: Spring goods sold in summer. Men’s suits dropped; home improvement and furniture rose.

• The lesson: Even during a once-in-a-century shock, asset values moved gradually, not catastrophically. ABL lenders who monitored collateral survived.

7. The Four-Legged Stool: How to Build a True Moat

According to Fredericks, successful ABL requires four in-house capabilities:

1. Origination

2. Structuring & Underwriting

3. Collateral Monitoring (different from financial reporting)

4. Workout (real, cycle-tested experience)

Most firms have the first two. The moat comes from having all four. Hilco is unique because it also has affiliated appraisal and liquidation businesses. As defaults inevitably rise with the credit cycle shift, firms with deep workout experience will raise cheaper capital and win.

8. The Future: Consolidation Is Coming

In ten years, Fredericks predicts:

• Banks will remain, but large asset managers will acquire smaller ABL firms.

• The ABL market cannot grow as large as the cash-flow market, so scale will come via consolidation.

• Example: ORIX USA’s recent controlling investment in Hilco was explicitly to create an ABL platform. Other similar deals are happening. The “middle ground” will consolidate.

9. Talent Crisis: ABL Is “Not Sexy” (But Should Be)

Fredericks’ most urgent warning: the industry is aging, and young talent is flocking to flashier corners of finance. ABL doesn’t “jump off the page.” Yet each deal is unique, dynamic, and requires real problem-solving. His prescription:

• Aggressive recruiting at business schools.

• Better teaching of ABL as a finance career path.

• The industry must sell its dynamism, not just its safety

Key timestamps:

00:05 Introduction to ABL Investing
02:39 Importance of ABL in Investment Portfolios
04:07 Institutional vs Retail Investor Perspectives
05:53 Educational Gaps in ABL Understanding
07:30 Historical Credit Cycles and ABL Resilience
10:24 Macroeconomic Trends and Systemic Risks
15:08 Lending Strategies and Asset Selection
16:40 Origination Sources in ABL
18:36 Creating Competitive Advantages in ABL
19:45 Collateral Monitoring Techniques
22:12 Future of ABL in Asset Management
24:26 Talent Acquisition for the Future of ABL