Increased regulatory oversight by the Australian Securities and Investments Commission (ASIC) should not deter investors from private credit but rather enhance their confidence, according to Peter Szekely, managing partner at Tanarra Credit Partners. He believes the middle market segment of private credit presents a good opportunity for investors from a risk-return standpoint. Tanarra Credit Partners is an Australian alternative asset manager specialising in private credit and special situations investments. The company provides tailored financing solutions to mid-market businesses.
Szekely noted that, given the recent volatility in equity markets, private credit remains an appealing option for investors. He emphasised that it provides a valuable hedge against portfolio risk when building a diversified investment strategy. Szekely views ASIC’s increased scrutiny of the market as a constructive measure that will foster greater confidence in the rapidly expanding asset class.
ASIC’s focus, according to Szekely, is on key areas of concern within the local private credit market. These areas include the sectors in which funds are invested, the methods managers use to value portfolios, potential conflicts of interest, and the importance of transparent reporting for investors. Szekely also outlined four key factors that investors should consider when evaluating a private credit fund.
These factors include awareness of the specific sector and its prospects. Whether it involves residential property, corporate debt, technology, healthcare, or another sector, Szekely stresses the importance of ensuring that private credit exposure is well-diversified. He added that ASIC’s objective is to guarantee transparent disclosure and clear valuation for investors, suggesting that funds should employ two independent external agencies—one to approve all valuations and another to sign off on the annual audit.
