Specialist Australian and New Zealand Private Debt investment manager Revolution Asset Management (Revolution) has been awarded a mandate to originate and manage Australian and New Zealand Private Debt from QIC, through a co-investment relationship.
As with its existing co-investment arrangements, the firm will lead the origination of new transactions and provide full credit analysis and structuring of private credit opportunities alongside its other funds. This approach allows institutional investors to access Australian and New Zealand private markets where it is otherwise difficult to do so, with the benefit of Revolution’s extensive sponsor relationships, strong experience and extensive track record in managing Australian and New Zealand private debt. The additional capital to flow into private debt markets is a welcome development for sponsors in their financing requirements from long term, patient ‘buy and hold’ investors.
Chief Investment Officer at Revolution, Bob Sahota, said: “The trend towards private credit investment continues as Australian and New Zealand institutional and wholesale investors seek out reliable and defensive income in a backdrop of poor global growth, low inflation and falling yields. Large investors are repositioning their portfolios for defence in this highly uncertain environment, and the qualities of Australian and New Zealand private debt offer patient investors with an appealing solution.”
Revolution’s investment funds include predominantly senior secured assets such as corporate leveraged loans, private asset backed securities (ABS) and real estate loans, that benefit from having security and structural protections such as loan covenants. The limited liquidity structure of Revolution’s funds mean the firm avoids any forced selling of assets and its strategy deliberately avoids pro-cyclical industries.
“In terms of deal flow, what we have witnessed over the last two to three months is that the market for secondary transactions is providing the opportunity to participate in high quality transactions at a significant discount to the original face value of loans and ABS securities. The effect of this is that we are able purchase the same assets that we know extremely well (that we’ve invested in our first fund) but buying at a much more opportunistic level, and have our co-investors participate. Sellers are forced to liquidate otherwise performing assets, as a result of having to raise liquidity to meet redemptions in their own funds. This has been the key focus of what we’ve been able to achieve while the primary market’s been somewhat subdued.” said Mr Sahota.
Having established the firm just over two years ago, Revolution launched its second fund in December 2019 with an open-ended structure that has already surpassed A$200m in committed capital with 86% of this capital deployed. Overall Revolution has invested in excess of A$550m on behalf of its funds and institutional clients with a further A$500m in available capital to deploy (as at 31 August 2020).
For more information on performance and the portfolio of loans or about the Revolution Private Debt strategy, contact us.