Msquared Capital secures $150m warehouse facility with Australian bank

Private credit manager Msquared Capital has established its inaugural $150 million warehouse facility in partnership with "a leading Australian bank."

Msquared said that the partnership marked a significant step in the firm's evolution, positioning it to meet rising demand from brokers and borrowers seeking agile, high-quality financing solutions across residential, industrial, and commercial property sectors.

The facility also allows the firm to expand its ability to provide tailored lending solutions, while maintaining its focus on quality and risk discipline, Msquared added.

Msquared chief executive Paul Miron told Financial Standard that the warehouse covers deals of any type and size that's financed directly in the Msquared Mortgage Income Fund.

"Therefore, if required, we have the option to novate already funded loans within the Msquared income fund, which can create immediate liquidity within the fund," he said.

The warehouse facility is particularly comforting in the event of a run on money due to a increase demand of liquidity, he added, as it allows the warehouse to novate a loan directly from the pool into funds, thereby generating additional liquidity in the fund.

"Many financial planners and investors want to understand the risk mitigation strategies associated with these types of events. They should be encouraged to ask more questions to appreciate both the risks and whether good managers are stress-testing their business for black swan events, not just for asset preservation events but liquidity as well," he said.

"Many investors who invested during the Global Financial Crisis want to ensure their funds are not locked up for extended periods, as private markets are often illiquid in nature and they are keen to understand the manager's ability to find liquidity when required the most."

The Msquared Mortgage Income Fund is a registered fund, whose mandate doesn't permit investments in construction, rural or vacant land, and specialised securities. As of April 30, the fund held 43 investments with a weighted average Loan-to-Value Ratio of 56.16%.