Private credit has grown into one of the largest segments of the alternative investment market, with approximately $2.3 trillion in assets under management (AUM). As the market has expanded, lenders have developed new ways to evaluate businesses that fall outside conventional bank lending criteria, particularly companies whose value is tied to specialized operating assets rather than measured financial metrics.
Third Eye Capital, one of Canada’s leading alternative capital providers, provides a clear example of how the market continues to adapt. The firm’s investment approach centres on understanding a company’s operations, management team, and asset base before determining how to structure its financing. That philosophy mirrors a growing emphasis across private credit on understanding how businesses create value without relying solely on historical financial performance.
The starting point for commercial lending itself has not changed much over the years. Lenders still want to understand what a business owns, how it generates cash, and whether it can repay a loan.
What has changed is the amount of work required to answer those questions.
Looking Beyond Traditional Collateral
For an increasing number of companies, the assets that drive enterprise value cannot be fully understood from financial statements. Third Eye Capital’s lending approach illustrates this shift by evaluating assets that may receive limited attention in conventional underwriting when they play an important role in supporting a company’s future cash flow.
A mining reserve, for example, cannot be assessed without understanding the underlying geology, permitting status, extraction costs, and long-term development plan. Looking only at its carrying value on a balance sheet says very little about its commercial potential.
The same principle applies across many industries. A software company’s proprietary code may generate recurring revenue for years. A logistics business may derive significant value from long-term customer contracts. An energy producer’s reserves or a manufacturer’s specialized equipment may represent assets that require technical expertise to evaluate properly.
Accordingly, Third Eye Capital’s investment criteria extend beyond conventional collateral to include assets such as mineral reserves, patents, proprietary software, contractual rights, licenses, customer lists, and other operating assets when they contribute meaningfully to enterprise value.
Private Credit Has Expanded Alongside Changing Borrower Needs
The growth of private credit has also coincided with changes in how businesses seek financing.
Companies pursuing acquisitions, expanding production capacity, investing in technology, or navigating restructurings often require financing that accommodates circumstances outside standardized lending models. Firms such as Third Eye Capital have built investment strategies around these situations, structuring financing according to the business’s characteristics and the purpose of the transaction rather than applying a standardized lending model.
As demand for this type of flexible financing has increased, institutional investors have continued allocating capital to private credit. Preqin’s Private Credit in 2026 report notes accelerating investor demand and improving fundraising conditions, signalling continued confidence in the private credit market.
Understanding the Business Before Structuring the Loan
Financial statements remain one of the most important sources of information in any lending decision. They explain where a business has been, but rarely provide a complete explanation of where it is headed.
Third Eye Capital’s investment principles place considerable emphasis on understanding the business itself before determining an appropriate financing structure. This approach recognizes that a temporary decline in earnings may result from commissioning a new manufacturing facility, integrating an acquisition, developing new technology, or expanding into additional markets. While those investments may reduce short-term profitability, they may also strengthen future cash generation.
Evaluating those situations often requires meetings with management, examining operations, understanding customer relationships, evaluating supply chains, reviewing industry dynamics, and determining how assets contribute to future performance.
Financing Around Business Events
Many commercial financings are tied to significant business events, with acquisitions, recapitalizations, growth initiatives, restructurings, refinancing transactions, and working capital investments each creating different financing requirements. Repayment schedules, covenant structures, collateral packages, and loan terms often need to correspond with the objectives and timing of those events.
Third Eye Capital focuses much of its lending activity on these situations, where financing can be tailored to projected cash flow, available collateral, operational priorities, and anticipated milestones. That flexibility has become a defining characteristic of much of the private credit market as borrowers seek capital structures that fit the circumstances of a particular transaction.
Experience Plays an Important Role in Credit Decisions
Third Eye Capital’s investment philosophy places significant weight on practical judgment alongside financial analysis.
Determining whether mineral reserves are economically recoverable, proprietary software provides a competitive advantage, customer contracts support predictable revenue, or management has a credible operating plan depends on both experience and financial modelling.
For many asset-based lenders, underwriting combines quantitative analysis with operational due diligence and industry expertise. Firms such as Third Eye Capital also tend to work alongside portfolio companies on operational improvement, financial planning, acquisitions, restructuring, and business strategy.
Asset-Based Lending Continues to Develop
The foundations of asset-based lending remain consistent. Credit discipline, collateral evaluation, and repayment capacity continue to guide lending decisions.
The difference today lies in how value is assessed.
Many businesses now generate enterprise value through specialized operating assets that require technical expertise and detailed due diligence to evaluate accurately. Third Eye Capital’s investment framework demonstrates how secured lending can incorporate operational analysis and industry knowledge when assessing those businesses.
As private credit continues to grow, with PitchBook projecting approximately $27 trillion AUM by the end of 2030, this underwriting style is becoming an increasingly familiar part of financing for companies whose value extends well beyond what appears on a balance sheet.
