Channel Capital launches Apollo asset-backed credit trust in Australia

Channel Capital has launched an open-ended, semi-liquid investment solution providing Australian wholesale investors access to Apollo's asset-backed finance strategies.

The strategy benefits from a "flexible" investment mandate and multiple origination channels, seeking consistent income backed by stable cashflows and protection through credit enhancement, diversification, and structural protection, the firm said.

It invests all assets into Apollo Asset Backed Credit Company - the underlying company managed by Apollo Manager, a subsidiary of Apollo Asset Management.

Apollo has more than 15 years of experience in investing asset-backed finance and houses over US$785 billion of credit assets under management as of March 31.

Asset-backed finance encompasses a broad set of credit types, which includes residential mortgages, credit cards, student loans, infrastructure royalties, and more.

According to data from SIFMA, JP Morgan, Apollo and the Financial Stability Board, asset-backed finance is collectively making up to a US$20 trillion market today.

Commenting, Channel Capital co-head of distribution Luke Mandekic said the investment methodology can offer a "valuable complement" to traditional fixed income allocations.

"These strategies are known for their defensive characteristics, often structured with strong collateral protection to reduce default risk and improve recoveries," Mandekic said.

"Asset backed finance can provide investment-grade equivalent risk with the potential for enhanced yields, and a lower volatility profile."

Meanwhile, Apollo partner and head of Asia Pacific global wealth management Edward Moon said the firm is pleased to expand access to its strategies in Australia, where he thinks it is a priority market for Apollo.

"... we are focused on meeting the evolving needs of Australian investors, corporates and retirees through creative capital solutions and customised products," Moon said.

"Secular changes in financial markets continue to position the asset backed finance market for future growth, and we believe the strategy offers an attractive value proposition, leveraging Apollo's differentiated origination capabilities, structuring expertise and robust risk management framework."

The minimum investment amount for the fund is $100,000 and incurs a 1.15% p.a. management fee of the net asset value of the fund.

It has a maturity timeframe of over five years and is distributed quarterly.

The announcement follows Channel Capital's subsidiary Channel Investment Management that it secured a responsible entity mandate for two strategies from CBRE Investment Management in January.