Australia’s credit market continues to experience increased interest and thus demand for assets, pushing listed credit asset yields lower, which has flowed through to private or unlisted markets. As a specialist in asset backed securities or lending to lenders, we see increased competition both from other fund managers and domestic or international banks who are actively seeking to grow their portfolio of credit assets. While domestic banks are governed by APRA primarily under APS120, limiting their risk profile/appetite, some international banks have less restrictive policies/regulations or may even have access to alternate sources of capital (I.e. in house or related party investment funds) enabling a higher risk profile/appetite. It is, therefore, of the utmost importance that credit standards and access to transactions remain at the forefront of our approach.
The above dynamic is a natural progression of the Australian credit market moving towards a more mainstream asset class rather than a less prevalent ‘alternative’ in investor portfolios. This evolution dynamic shall drive more significant investment and sophistication by the Fund manager that operates within it, while also seeing investment models with high manager fees and yields lose relevance. Overall, we welcome this evolution as we are constantly reassessing to ensure our investment model is a beneficiary of such industry changes and thus, an attractive destination for transactions.
As our minds turn towards the festive season and end of the calendar year, we would like to thank all our investors and advisers for their increasing support and engagement. Our continued investment in our team and investment process is only possible with your support.
