Arbitrium Credit Partners Fund
The Fund invests in a portfolio of secured loans of $20m to $80m, in mid-market non-investment grade Australian corporates that are currently underserviced by banks and credit funds. (For Wholesale Investors Only)
The Fund seeks to undertake medium to long-term investments with limited liquidity as a result of which the ability of Investors to realise their investment in the Fund prior to the maturity date of the Investment Term may be limited.
An investment in the Fund is speculative and involves a high degree of risk, including the risk that the value of your investment could fall or be entirely lost.
As a mitigant, the Fund will not invest in unsecured loans and will only invest in loans which are secured by some collateral (e.g. property, plant and equipment, cash, receivables) which can provide some level of protection to the downside risk.
Given the stressed nature of the Fund’s target loans and the anticipated limited liquidity of the borrowers, the loans are likely to be structured with capitalised interest and/or no principal amortisation. Therefore, the Fund is not a traditional yielding credit fund.
The structure of each target loan made by the Fund will differ on a case-by-case basis and will be influenced by the level of cash flows generated by the borrower and the working capital requirement to effectuate a turnaround of the borrower.
The Fund seeks to outperform the Reserve Bank Overnight Cash Rate by 600 basis points per annum while investing in each transaction. Additional returns are expected from equity warrants and early termination fees.
Investment Term
Generally, the term of each Series will be a total of 6 years from the Final Closing Date, which can be extended at the discretion of the Investment Manager by up to four 1-year periods if it is deemed to be in the best interests of Investors unless otherwise specified in the Supplemental IM with respect to the deal and Liquidity Specific Series.
The Fund will invest in Australian dollar-denominated credit assets including but not limited to senior secured loans or leases that are opportunistic, stressed, distressed and special situations credit with a face value of less than $80 million.
The loans will be to mid-market Australian-based corporates and may have equity warrants attached that provide the optionality to convert to equity in the borrower’s company as part of the terms of the loan.
The Fund provides patient capital along with turnaround assistance to mid-market Australian corporates where banks and non-bank lenders are unable to provide funding.
The provision of a turnaround plan by the borrower will be a key term of any loan made by the Fund. The assessment and approval of the turnaround plan will be undertaken by the Investment Manager as part of the credit assessment process for each loan.
The Fund does not invest in residential or mixed-use property development and will only provide finance to entities that satisfy the Investment Manager’s ESG policy.
The Fund does not intend to apply leverage to its investments however, the Fund reserves the right to apply leverage, where applicable, and subject to a rigorous credit assessment process and Investment Committee approval.
The Fund seeks to enhance returns to its investors by structuring its debt investments through capitalised interest, make-whole premiums, exit fees and any of the investment uplift from equity warrants.
Investment Process
Once an opportunity is identified, the investment team undertakes a detailed due diligence process, completes a credit assessment and assigns a risk rating to the credit and completes a credit paper. The credit paper is then passed on to the Investment Committee for approval before the proposed investment can be made.
Pooled Series (Class A Unit)
The Pooled Series is intended to invest in a portfolio of distressed, stressed and opportunistic corporate loans with a face value between $20 - $80 million.
An investment in the Pooled Series may provide Investors with exposure to underlying assets including, but not limited to, debt securities such as warrants and corporate loans. The specific investments that are made from time to time may not be disclosed and may be switched subject to certain conditions being met, including that the underlying investment matures and/or new investment options become available.
The target fund size of the Pooled Series is $300 million in Committed Capital. The Investment Manager has the discretion to accept commitments in excess of this amount.
The minimum investment for Class A is $1,000,000.
Deal Specific Series (Class B)
The Investment Manager may select from the investment opportunities it identified through its network an investment with reasonable upside potential to be the underlying investment of a Deal Specific Series.
Liquidity Specific Series (Class C)
The Investment Manager may offer a limited liquidity series that will commit to at least 80% of the Liquid Specific Series to Class A with the remaining assets held in cash and near cash to provide limited liquidity for investors. The specific information about the underlying investment will be disclosed in the Liquidity Specific Series Supplemental IM, together with other investment terms.
The minimum investment for Class C is $100,000.
Arbitrium Credit Partners Pty Ltd trading as Arbitrium Capital Partners (“ACP”) is a fund manager specialising in investing in opportunistic, stressed, distressed and special situations credit in Australia and New Zealand.
The team at ACP has over 70+ years of combined experience in distressed debt, funds management and corporate turnarounds through numerous credit cycles and have worked on some of the most complex corporate debt restructures in Australia and helped them survive to operational excellence.
ACP is a provider of patient capital along with turnaround solutions to mid-market corporates where banks and non-bank institutions are unwilling to provide funding.
Harvey has been a senior executive and board member with over 30 years in financial services providing leadership and strategic advisory across business growth, risk management, funds management, service provision, operations and innovation.
Current positions include Board Member and Chair of the Audit and Investments Board Committee for the Menzies Foundation, Chair of the Melbourne Securities Corporation, Chair of Connexian, Chair of ASX Listed Raiz Invest, Chairman of the Financial Planning Advisory Board at Deakin University, Member of the Heart Foundation of Australia Board Investments Committee.
Harvey also held Board Positions with the Victorian Legal Services Board and executive positions at KPMG, ANZ and Ford Credit.
Mukhtader has over 12 years’ experience in complex debt destructuring, credit structuring, M&A and corporate turnaround management across a diverse range of industries including airlines, energy, utilities, infrastructure, oil & gas, and construction.
Mukhtader has worked in Australia, USA, Papua New Guinea, Singapore and Spain.
Mukhtader was a Director at Deloitte Restructuring Services specialising in Financial Restructuring and Debt Advisory.
Prior to Deloitte, Mukhtader worked at Qantas Airways Limited in strategy and investments and prior to that worked in restructuring at Taylor Woodings (now FTI Consulting).
Mukhtader has advised on corporate debt transactions with debt values aggregating approximately $14bn.
Mukhtader has a MBA (Executive) from AGSM, Sydney and Leonard, N.Stern School of Business, NYU in New York. Mukhtader holds a Bachelor of Commerce (Accounting and Finance) from Curtin University and is a member of the Institute of Chartered Accountants Australia and New Zealand.
Daniel has over 26 years’ experience in funds management at major financial services firms including; Goldman Sachs, UBS and Deloitte, in prime broking, compliance, governance and investment strategies, as well as operating model designs, credit research and project management.
Daniel was a Director in Deloitte Consulting Services providing operating model risk assessment services to fund managers in Australia.
Daniel has a BSc from Adelaide University and BA(Accounting) from the University of SA, Graduate diploma in finance. In addition Daniel is CPA, Series 7 qualified.
Blake specialises in funds management, equity and debt structuring, investment banking and M&A and turnaround management. Blake has over 25 years of experience across a diverse range of industries including agriculture, energy, utilities, infrastructure, property development and waste management.
Blake was a Shareholder and Head of Asset Management at FC Capital Holdings, one of Australia’s largest alternative asset managers with a total of $475m of FUM. Prior to that, Blake was Chief Executive Officer of Handbury Asset Management Pty Ltd. with c. $350m of FUM. Blake managed a team of over 300 staff at Handbury Asset Management. Blake started his executive career at Lloyds Bank TSB Plc before it was acquired by ABN AMRO Australia.
Blake has held fiduciary roles as a committee member of FC Funds Management, Investment Advisor of CVC Investment Services and Director of Handbury Asset Management Pty Ltd.
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