Banks have left a $240 billion gap, now savvy investors are seeing opportunity
Private credit used to be the domain of high net worth investors but that is all changing as nimble operators fill a gap in the market.There’s a $240 billion funding gap facing the small and medium enterprises (SMEs) that employ 70 per cent of the population. SMEs play an essential role in the economy. However, changes to regulatory requirements are making it harder for them to access funding to help them innovate and grow.
Whilst this gap presents a challenge for businesses, it also creates opportunity for nimble operators to fill the void as traditional banks leave the SME market to focus on activities like residential mortgage lending.
“With the banks taking a step back from lending to small and medium enterprises (SMEs), a lot of Aussie businesses are forgoing growth and profitability because they can’t access debt. So, what we’re seeing is a number of focused SME lenders emerging which operate in different niches – and this market start to burgeon. The reality is you need that debt capital to get the lending businesses going and we’re here to provide that to the right lenders.“
I spoke with James Marlay from Livewire as part of their 2023 Income Series to share my views on the drivers for this income opportunity, how the current economic environment is impacting various sectors of the economy and where I am seeing opportunities to generate stable income.
Topics discussed
- 0:00 – Introduction
- 1:52 – The growth of private credit in Australia
- 3:20 – Why the opportunity in private credit exists
- 4:40 – Economic outlook in Australia
- 5:30 – The impact of higher rates on small and medium enterprises
- 7:47 – Aura’s portfolio characteristics
- 8:45 – How technology is enabling lending to small and medium enterprises
- 9:42 – An overview of Aura’s two income funds
- 10:59 – Competition in the lending market
- 12:06 – Aura and Montgomery Investment Management
If you would like to learn more about the Aura High Yield SME Fund (wholesale clients only), please visit the fund’s web page to learn more: Aura High Yield SME Fund
For retail investors, if you would like to learn more about the Aura Core Income Fund, please visit the fund’s web page to learn more: Aura Core Income Fund
You should read the relevant Product Disclosure Statement (PDS) or Information Memorandum (IM) before deciding to acquire any investment products.
Past performance is not an indicator of future performance. Returns are not guaranteed and so the value of an investment may rise or fall.
This information is provided by Montgomery Investment Management Pty Ltd (ACN 139 161 701 | AFSL 354564) (Montgomery) as authorised distributor of the Aura Core Income Fund (ARSN 658 462 652) (Fund). As authorised distributor, Montgomery is entitled to earn distribution fees paid by the investment manager and, subject to certain conditions being met, may be issued equity in the investment manager or entities associated with the investment manager.
The Aura Core Income Fund (ARSN 658 462 652)(Fund) is issued by One Managed Investment Funds Limited (ACN 117 400 987 | AFSL 297042) (OMIFL) as responsible entity for the Fund. Aura Credit Holdings Pty Ltd (ACN 656 261 200) (ACH) is the investment manager of the Fund and operates as a Corporate Authorised Representative (CAR 1297296) of Aura Capital Pty Ltd (ACN 143 700 887 | AFSL 366230).
You should obtain and carefully consider the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the Aura Core Income Fund before making any decision about whether to acquire or continue to hold an interest in the Fund. Applications for units in the Fund can only be made through a valid paper or online application form accompanying the PDS. The PDS, TMD, continuous disclosure notices and relevant application form may be obtained from www.oneinvestment.com.au/auracoreincomefund or from Montgomery.
The Aura High Yield SME Fund is an unregistered managed investment scheme for wholesale clients only and is issued under an Information Memorandum by Aura Funds Management Pty Ltd (ABN 96 607 158 814, Authorised Representative No. 1233893 of Aura Capital Pty Ltd AFSL No. 366 230, ABN 48 143 700 887).
Any financial product advice given is of a general nature only. The information has been provided without taking into account the investment objectives, financial situation or needs of any particular investor. Therefore, before acting on the information contained in this report you should seek professional advice and consider whether the information is appropriate in light of your objectives, financial situation and needs.
Montgomery, ACH and OMIFL do not guarantee the performance of the Fund, the repayment of any capital or any rate of return. Investing in any financial product is subject to investment risk including possible loss. Past performance is not a reliable indicator of future performance. Information in this report may be based on information provided by third parties that may not have been verified.
Brett Craig is responsible for portfolio management and asset origination for the Aura High Yield SME Fund and the Aura Core Income Fund. Prior to joining Aura Group, Brett held a number of roles at Macquarie Group over an 11 year period including Vice President within the Debt Markets business where he focused on originating, structuring and distributing debt products primarily in the Australian market.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
