Date/TimeDate(s) - 21/08/09
1:15pm - 3:00pm
Level 43 / 80 Collins Street
Debt Financing for SMEs – Back to the future of merchant banking
The financing gap for SME’s borrowing between $5 and $25mn is a common phenomenon worldwide. Regulatory capital constraints and structural issues limit the attractiveness of these companies to major banks. Although this market was well serviced by merchant banks and finance companies in the 1980and 90’s, many of these organisations no longer exist.
The GFC has further tightened credit market conditions as banks have taken an even more conservative approach to lending, making it difficult for SMEs to take on debt-financing. Despite falling interest rates, many SME borrowers are paying more for their debt than before the GFC.
A recent survey by a Melbourne-based research firm DBM Consultants (Business Financial Services Monitor, 6/2009) showed that almost half of SMEs are finding it more difficult to borrow this year than a year earlier. Among the most affected were businesses with an annual revenue of between $A5 and $A50 million, and those in wholesale trade and financial and business services.
Is lending now strictly just the banks’ domain? Private debt funds have been operating for quite some time overseas, however, they are still a rare case in Australia. Causeway Asset Management is an interesting example of how a specialist investment manager explores the niche of private lending and how it applies detailed credit analysis to identify attractive risk adjusted lending opportunities in the Australian market.
The company’s executives will provide insights into the scope for bespoke private lending in Australia. Based on research commissioned by Causeway in 2005, East and Partners estimate that the annual borrowing demand for this sector of the lending markets in Australia is now in excess of $500bn per annum.They will also address the growth in the US and Australia of private debt funds invested in asset backed and cash flow loans and consider the scope for the creation of specialized SME debt asset sub-class.
Our Speaker: Causeway Asset Management Limited has operated in the Australasian private debt market since 2004 and has invested more than $300mn in private debt opportunities for strategic partners and their fund investors over that time. Their team has more than 100 years of combined experience in Australian and global debt markets, with a credit team whose core skills have been developed in the private debt sector over 25+ years of credit cycles.
Sponsored by: Causeway Asset Management
Venue Partner: Thomson Reuters