Myth: Private credit only involves lending to distressed businesses and sectors/industries
In this short video, I was joined by Brett Craig, Director at Aura Credit Holdings, our partner in private credit, to addresses a common misconception: that private lending is only for distressed businesses. Brett explains that the Aura Private Credit Income Fund does not deal with distressed debt but focuses on providing capital to quality Australian businesses. After regulatory changes post-GFC, major banks shifted focus, leaving a $400 billion funding gap that private credit funds are now filling to help these businesses grow and thrive.
You can watch the full 13-minute video on myth busting private credit here.
Transcript:
Roger:
Well, the next myth that we’ve got is that private lending or private credit is really about lending to distressed businesses. Talk about the quality of the businesses you’re lending to.
Brett:
We do not do distressed debt. So, we do not lend to businesses who are looking to borrow their way out of trouble. What we’ve seen post-GFC, there were some regulatory changes, with the Basel III changes, which basically led to a lot of the big four banks focusing on either residential mortgages in their lending books, or very large corporate loans. And what it did was it left a significant underfunded market for your small to medium-size enterprises (SMEs) through to your mid-market corporates, so a funding gap of circa $400 billion.
These are businesses that are screaming out for debt capital to help them increase their growth or profitability, but it’s not being provided by the big four banks. And that’s where private credit, has become significantly larger because private credit funds are stepping into that breach to provide that debt capital to quality Australian businesses.
Learn more about the Aura Private Credit funds here, or call us on 02 8046 5000.
Disclaimer
The Aura Private Credit Income 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)(Aura Group).
This information is for wholesale or sophisticated investors only and is provided by Montgomery Investment Management Pty Ltd (ABN 73 139 161 701, AFSL No. 354 564)(Montgomery) as the authorised distributor of the Fund. An investment in the Fund must be through a valid online application form accompanying the Information Memorandum.
The information provided is general in nature and does not take into account your investment objectives, financial situation or particular needs. Before making an investment decision you should read the Information Memorandum and (if appropriate) seek professional advice from a licensed financial advisor to determine whether the investment is suitable for you.
Montgomery and Aura Credit Holdings Pty Ltd (ACN 656 261 200, CAR 1297296) (Aura Credit Holdings), who is the Investment Manager of the Fund 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.
Where information provided by Brett Craig, Portfolio Manager of the Fund, consists of General Advice, this is provided as an Authorised Representative (AR No. 001298683) of Montgomery.
Aura Group has entered into a Distribution Partner Agreement (Distribution Agreement) with Montgomery to distribute the Fund to its client base. Montgomery may receive a share of the fees you pay as well as potential equity in Aura Credit Holdings.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
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.
