Finexia Financial Group Limited (ASX: FNX) has announced it has ceased all negotiations regarding the proposed strategic disposal transaction involving Creative Capital Group Pty Ltd and the management rights to Finexia Childcare Finance Trust. Finexia, which specialises in providing financial solutions and investment opportunities, particularly within the alternative asset classes, had previously signed a non-binding agreement with a group of investors including its former CEO, Patrick Bell, but will not be pursuing this or any other similar agreement at this time. This announcement follows the initial market update on the proposed transaction released on March 6, 2025.
During due diligence, Finexia identified changing circumstances with one of its borrowers, Vertical 4 Pty Ltd and Abacus 49 Pty Ltd (collectively known as “Genius”). As a result, Finexia has appointed Mr Alan Walker of WLP Restructuring as external administrator to Genius, to protect stakeholder interests and preserve asset value. The company is working with the administrator to achieve an optimal resolution to the default loans. Finexia has stated that the administration has not had a material impact on its revenue, which has remained largely consistent with the prior financial year.
The Genius loan exposures were held within two distinct pools of capital, the Finexia Childcare Income Fund (FCIF) and the Finexia Childcare Finance Trust (FCFT). Finexia has no direct balance sheet exposure to the impaired credit in FCIF, as the loans are held within a registered managed investment scheme. The total exposure is $21.2 million secured against assets totalling $29.1 million. Finexia has incorporated a special purpose vehicle, Shared Beginnings Pty Ltd, to hold the assets during the debt recovery process and has secured an additional $6 million in collateral, bringing the total pooled collateral to $35.1 million against the $21.2 million debt.
In addition to these actions, the Finexia Board has commissioned internal and external investigations into the circumstances surrounding the Genius situation and potential regulatory breaches within the FCIF. Furthermore, the company has begun a review of its Stayco business and may consolidate Stayco into Finexia’s financial statements. Despite these issues, Finexia continues to focus on its core business activities, with the support of its strategic financing partners, Income Asset Management Limited and Global Credit Investments.
