Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
Epsilon Direct Lending Fund launch great news for Aussie middle market companies
Specialist Australian middle market private credit manager, Epsilon Direct Lending, this week confirmed the successful launch of their first fund after securing foundation investors.
As highlighted in our earlier article, published in February here, the private credit market has seen massive growth in recent years as the major banks withdraw capital from the sector. This despite debt financing being one of the only forms of capital available to the small and medium-sized private businesses that are central to Australia’s world leading economic recovery.
The Epsilon Direct Lending Fund, as it has been named, was the brainchild of three ex-Commonwealth Bank corporate lenders, Paul Nagy, Mick Wright-Smith, and Joe Millward. After spending years together building the corporate loan book, demand from their clients for bespoke financing, coupled with a change in major bank capital requirements, were the key drivers for them to establish Epsilon and address the demand from the underserved middle market.
Restricted to wholesale or sophisticated investors, the strategy has seen significant demand from wealth investors and leading financial advisers alike. At the core of Epsilon’s approach is their focus on backing highly profitable growing companies, including those undertaking acquisitions or reinvestment into their own operations. This includes partnering with private equity firms, supporting growth and event-driven purposes.
According to the media release, foundation investors in the strategy, which focuses on making bilateral loans to individual companies, range from private wealth firms, multi-family offices and individual high net worth investors. The funds raised will be deployed into a ‘strong pipeline of lending opportunities’ in order to finance what Epsilon described as some of ‘Australia’s highest quality companies and private equity investors’.
Investor demand for stable and reliable income continues to be strong, with the Fund providing wholesale investors with access to the market opportunity in direct corporate lending to performing middle market companies with strong market positions, proven management teams and robust financial histories.
With income hard to come by, the targeted return of 6 per cent above the bank bill swap rate the majority of which will be paid quarterly in cash, delivered through secured, floating rate loans is likely to remain in high demand. The fund does not invest in property related financings, will be open for applications on a monthly basis and is now available on the PowerWrap, Netwealth and Macquarie Wrap platforms.
