Causeway PM, an Australian-based investment manager of private debt strategies, has announced that as part of its growth strategy, it is expanding its capacity to manage a larger pool of investor funds by forming a strategic joint venture with ASX-listed investment company, Hancock and Gore (ASX: HNG).
Hancock and Gore is an ASX-listed investment company that actively invests in small to medium-sized operating business with a sustainable competitive advantage and strong growth prospects.
As part of the JV, the H&G Causeway Dynamic Credit Fund is being launched to Australian investors. The Fund will provide a more efficient mechanism for borrowers targeting expansion opportunities or navigating illiquid capital markets due to size, industry, cashflow profile or asset-light nature. The Fund will engage in direct lending as well as the purchase of existing loans and loan portfolios that may require restructuring expertise. The Fund will be actively managed and maintain a disciplined, rigorous investment approach.
Causeway founder and director, Mike Davis said that the timing was optimal for a fund of this type in Australia, as investors look for increased exposure to the broadening private debt asset class with experienced managers.
“We are delighted to be working alongside the Hancock and Gore team on the H&G Causeway Dynamic Credit Fund. Hancock and Gore’s deep equity investment expertise complements Causeway’s credit assessment and debt management skills that we believe investors will value as exposures to the private debt asset class accelerate,” Davis said.
“This JV is the first of a number in the pipeline for Causeway. As part of our growth strategy, we will continue to build new fund partnerships with suitable partners.”
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Sandy Beard, executive chairman of Hancock and Gore said: “H&G believes access to debt funding provided by Causeway is invaluable to medium-sized companies, particularly at this stage of the economic cycle. The Causeway experience and approach to dealing with counterparties and experience in managing credit to deliver long term investor returns is an important part of H&G’s ongoing strategy.”
Causeway is a long-established player in the private debt arena, with a particular focus on direct lending to middle-market corporates. It has managed over $1.6 billion of loans since its inception and is led by a well-credential and highly experienced senior management team (average 30+ years) with strong Capital Markets, credit, analytical and loan structuring skills, coupled with extensive recovery, restructuring and workout experience.
Causeway has steadily accumulated approximately $600 million in Funds under Management and Advice since 2018 by servicing a small, select group of private, wholesale and institutional investors. Causeway investors include superfunds, foundations, family offices, wealth managers, platforms and HNWs.
Causeway’s current flagship fund – the Causeway Private Debt Income Fund – has already turned over more than 17 of 34 loans written and has generated average net returns of 10.28% per annum for 4 years to 30 June 2023, with a rolling 12-month net return of 10.89% to end of July 2023.
For its current flagship fund, Causeway has a highly selective and disciplined 10-11% conversion rate by volume of loan opportunities reviewed. The Causeway team actively originates, analyses, structures and manages all loans in our portfolio. This includes regular borrower dialogue, covenant tracking, compliance checks, financial analysis and business updates.
