This article is from the Australian Property Journal archive
EG Funds has teamed up with Msquared Capital to offer investors the opportunity to diversify into the private debt market to service capital products for residential and industrial sites across the eastern seaboard, as lending from traditional sources becomes more difficult.
The new venture will initially engage wholesale investors and family offices.
A key component of the joint venture is EG’s proprietary platform PRISMS, which will assist the team in applying an equity and debt lens on each prospective loan using data collected for more than 20 years.
“The debt market has historically been tightly held by major banks, but it is increasingly becoming prevalent for borrowers to access credit through non-bank lenders due to the traditional lenders placing strict criteria on capital products,” they said.
“These restrictions have become more rigorous during the volatile market, which leaves borrowers and mortgage brokers turning to alternative lenders for funds.
Rodney Walt, head of private wealth at EG, said a funding gap within the market has been recognised as lending from the major banks declines.
“That’s why private debt has been viewed as the ideal opportunity for our investors. The joint venture supports an underserved market, with capital secured by quality real estate in Australia to further enhance returns for our investors.”
Msquared Capital managing director Paul Miron said the appetite for private debt has “skyrocketed” over the past few years, “with no signs of slowing”.
“Against a backdrop of market volatility, investors seek opportunities to diversify and secure strong returns, and private credit backed by property offers great appeal.”
Small business demand for non-bank lending solutions has jumped by 50% over past 12 months, according to business lender ScotPac. Its latest SME Growth Index report found non-bank borrowing demand in the March quarter was triple that recorded in September of 2018.
