Metrics freezes redemptions behind listed funds as audit stalls

Metrics Credit Partners has suspended redemptions in the unlisted wholesale funds that underpin its three ASX-listed strategies, according to an ASX statement by the funds' responsible entity.

Media reports have named the MCP Wholesale Investments Trust and the MCP Real Estate Debt Fund among those frozen.

The responsible entity, The Trust Company (RE Services), part of Perpetual, said the suspension was due to the same matters it disclosed two days ago, when it flagged the audited accounts would differ from the preliminary figures released in August.

All the three funds were also suspended from trading on Monday.

Those adjustments cut the net tangible asset (NTA) backing of the three listed funds: by 2% for the Metrics Master Income Trust (MXT), 10% for the Metrics Income Opportunities Trust (MOT) and 12% for the Metrics Real Estate Multi-Strategy Fund (MRE).The revisions have wiped an estimated $169 million from the combined value of the three funds.

The responsible entity said the changes stemmed from adjustments recognised in the unlisted wholesale funds. The listed funds are feeder funds whose values are determined by the net asset value of those underlying funds.

The audited accounts, due today, have also been delayed after auditor KPMG said it could not provide its audit opinion by the September 30 deadline. All the three ASX-listed funds will remain suspended from trading until they are lodged.

Investment services provider Ord Minnett said whilst the news of a material difference in audited accounts was "disappointing", it emphasised the quantum of the differences for the income statement is not yet known.

ASIC recently urged the private credit sector to uplift standards, noting participants should prepare for enforcement action if they fail to do so.

ASIC commissioner Simone Constant said the regulator is now "beyond warnings" and pushed players to assess themselves against its 10 best practice principles.

"Some of these investors - through structuring, hidden leverage or complex liquidity management practices - may find themselves exposed in ways they did not understand or could not have anticipated," Constant had said.

"In fact, some private credit experts we have worked with over the past 18 months agree that for some funds, even the most sophisticated investors could not really be sure what they were exposed to and how it would respond to a test.

"This is why we have repeatedly called for effective disclosure and consistency of terms."

Even before the audit adjustments, investors had been pricing in more risk for the listed funds. MRE was trading at a 27.2% discount to net asset value (NAV) and MOT at 23.3% as of July 31, according to Morningstar.

Property developer Bathla Group went into voluntary administration in late August, raising fears that investors will pull back from private credit funds exposed to the property sector.

In response, MA Financial introduced a temporary monthly redemption limit for the MA Secured Loan Series as a proactive measure in response to the potential for increased redemption activity.

Late August, Centuria Bass temporarily paused redemptions and applications to two of its private credit funds, the Centuria Bass Credit Fund and the Bass Property Credit Fund, over increased redemption requests driven by concerns around Bathla Group. It anticipates that the freeze on redemptions will remain in place for between two to six months.