Australia Regulator Halts Private Credit Fund on Bathla Risks

(Bloomberg) -- Australia’s regulator stopped Angas Securities Ltd. from selling two managed investment schemes, the latest in a slew of actions to prevent private credit funds offering products that don’t adequately highlight potential risks. 

The interim stop orders from the Australian Securities and Investments Commission prevent the Adelaide-based firm from offering, issuing, selling, or transferring interests in the Angas Prime Income Fund and the Angas Direct Mortgage Fund, according to a statement on Monday.

ASIC is concerned investors in both funds may not have been adequately informed about the financial position of Angas Securities and the risks arising from that position, it said. That includes worries about disclosures to investors in the Angas Prime Income Fund relating to its exposure to the collapsed Bathla Group and the risks arising from that exposure. 

Australia’s private debt market has been under the spotlight in recent months, with ASIC focused on reviewing problems in the sector. It is expected to publish an update of its private credit surveillance on Nov. 10. Sydney property developer Bathla fell into insolvency in August owning around A$3.4 billion ($2.3 billion), mostly to private credit funds. 

“Our message to private credit fund managers is crystal clear,” said Simone Constant, ASIC commissioner. “Investors need clear and timely information about the risks they are taking on, particularly when circumstances change and private credit loans run into difficulty.”

Angas Securities held about A$114 million in investor funds at the end of June, ASIC said.

“ASIC will continue its broader scrutiny of private credit and will continue to step up our actions,” she said. “We will act swiftly where we are concerned investors are not being given the full picture about the risks they face.”

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