Public and private corporate credit specialist Muzinich & Co. has launched in Australia the MLoan, a semi-liquid European private debt strategy.
Managed by Muzinich & Co.’s private debt team, the Fund is a diversified, income-generating strategy that primarily invests in European bank loans. It seeks to generate compelling returns by providing flexible financing, primarily to a diverse high-growth universe of medium-sized companies.
MLoan focuses on parallel lending, a version of private debt where an asset manager co-lends alongside a bank while the bank remains invested in the loan as is typical in the ‘originate and share’ model. Smaller allocations may also be made to syndicated bank loans and direct lending.
The Fund aims to capture a private illiquidity premium, while allowing investors to redeem on a quarterly basis. It targets double-digit net returns in Australian dollars annually* and is an ‘evergreen’ strategy that will remain open to new subscriptions and redemptions on an ongoing basis, as opposed to traditional private credit strategies which are illiquid and closed-ended.
“MLoan could be an optimal solution for private debt investors seeking strategies that are very resilient in navigating high interest rates and macroeconomic uncertainty,” said Gianluca Oricchio, Ph.D, Co-Head of Parallel Lending and Chief Data Scientist at Muzinich & Co.
Also read:
Small Parcel Bonds Now Accessible to Advisers
FIIG Selects Equity Trustees for Australian Bond Fund
“With a large number of investments and lowly levered targeted companies, the Fund seeks to minimize portfolio tail risk and strengthen principal protection. The investment process is very robust as not only are all loans approved by a bank’s credit department, but we perform our own qualitative analysis and then we use a proprietary AI/Deep Learning system that quantitatively analyzes a company’s risk of default. Our machine learning system combines a vast data set of both financial and behavioural information that allows for more accurate risk management outcomes compared to the Basel III advanced methodology system.”
“What we believe makes this strategy interesting is what we refer to as ‘parallel lending’,” added Justin Muzinich, CEO, Muzinich & Co. “Compared to more traditional private debt, we are at the same seniority level and benefit from the same protections as banks. In addition, these loans are often amortizing, allowing for more efficient portfolio construction and management of liquidity windows.”
MLoan is currently one of the only semi-liquid vehicles available in the Australian market that incorporates parallel lending.
The strategy will be accessible to wholesale clients in Australia through a master-feeder structure with Equity Trustees acting as the Responsible Entity.
Muzinich & Co. offers a broad range of corporate credit funds across both developed and emerging markets and manages US$35.3bn in fixed-income credit assets.
*High single digit net return in Euros.
