MA Financial locks down flagship private credit fund, shutters another

MA Financial has now suspended all redemptions and applications to its MA Secured Loan Series Fund, a $2.3 billion private credit portfolio after it imposed a temporary redemption limit in August. It will also wind up the MA Secured Real Estate Income Fund.

The ASX-listed firm announced the decision in a September-quarter update, saying the move is a "prudent measure to assist in the orderly management of the fund in the coming months in the face of less certain repayment timings from some borrowers." The fund expects to continue to pay monthly distributions to investors.

"Private credit fund outflows remained elevated as headwinds arising from the current challenges in the residential housing construction and development market has impacted investor sentiment," MA Financial said.

"Deteriorating residential real estate market conditions are extending timeframes for some asset sales and maturing loan refinancings."

Two months ago, the MA Secured Loan Series Fund temporarily restricted redemptions to 1% of the fund's assets under management (AUM). The portfolio consists of loan assets generally secured by a registered first mortgage over Australian real estate assets.

At the time, the company said the broader economic environment had become more challenging, with higher inflation and interest rates contributing to softer residential property market conditions. This was on top of the federal government announcing changes to negative gearing and capital gains tax, which "added to uncertainty and weighed on market sentiment."

It anticipated these factors, along with press speculation regarding other private credit managers, "may lead to an increase in redemption requests in the near term."

The collapse of Bathla Group was a flashpoint for the local private credit sector. MA Financial has no exposure to this.

The alternative asset manager specialises in private credit, real estate and hospitality.

MA Financial lends to property, corporate and specialty finance sectors and provides corporate advice. Total AUM for the group as at September-end rose by 18% year on year to $15.7 billion.

MA Financial joint chief executives Julian Biggins and Chris Wyke said the vast majority of the business segments were "performing strongly."

"Our operations in real estate private credit have recently proved challenging, impacted by the macro environment in residential construction and development in Australia. This segment of our business represents around 15% of our overall AUM, and significantly less as a percentage of our total earnings,'" they said.

"However, we are pleased with the overall strong growth and performance of our diverse business activities and investment strategies. The majority of our asset management operations, notably, asset-backed private credit, operating real estate such as pubs and marinas and core real estate continue to perform strongly."

Meanwhile, the MA Secured Real Estate Income Fund is now closed to applications after its responsible entity, on October 19, decided to terminate it.

At June-end, the unlisted unit trust had about $117.39 million in AUM.

The fund provided investors access to a diversified loan portfolio secured by registered first mortgages over Australian property, seeking to preserve capital and deliver monthly income of the RBA cash rate +3.75% p.a. over a rolling 12-month period.