Up Coming Politcal impacts on the growth of Private Credit

The private credit industry has grown rapidly in recent years emerging as a key alternative to traditional bank lending. International Analysis has estimated the size of the Australian private credit sector to be A$188b in assets under management comprised of A$112b in business related loans and A$76b in commercial real estate loans. The IMF has estimated global private credit at approximately US$2.1 trillion. This expansion has been driven by several factors, including banks’ retreat from riskier lending following the GFC.

Private credit can present compelling opportunities for both investors and borrowers. Unlike traditional bank loans, private credit offers bespoke financing solutions, making it particularly attractive to middle-market businesses, infrastructure projects, and property developers that may struggle to access capital through conventional means. Institutional investors, including superannuation funds, are also increasingly allocating capital to private credit as part of their portfolio diversification strategies, attracted by its historically strong risk-adjusted returns and low correlation with public markets.

However, this growth also brings significant risks and challenges, prompting regulatory scrutiny from bodies including ASIC.

Challenges & Risks

ASIC’s recent discussion paper highlights several key concerns, including valuation uncertainty, illiquidity, leverage, and conflicts of interest. Unlike public markets, where pricing transparency is well established, private credit valuations are infrequent and subjective, leading to potential mispricing of risks or within semi-liquid funds the potential for inequity between those applying for units and those redeeming units. Additionally, many private credit borrowers are highly leveraged, raising concerns about financial stability in the event of an economic downturn. Illiquidity remains a major challenge, as loans can be longterm, restricting investors’ ability to exit positions quickly. Regulatory oversight is likely to continue to evolve, with ASIC supervision to focus on governance, valuation methodologies, and investor protections.

As private credit continues to expand, balancing its opportunities with risk management is essential.

Where are we moving from here?

Private credit has been seen as an attractive opportunity for investors, providing diversification, enhanced income streams, and reduced volatility compared to traditional asset classes. As a non-bank lending alternative, private credit can be particularly attractive in periods of market dislocation, offering stability when public markets experience fluctuations.

While private credit clearly has benefits, it also carries risks related to illiquidity, valuation governance, and leverage among others. Matrix Capital Management applies rigour in any review process to ensure these factors are thoroughly captured and integrity is maintained in any rating generated.

Moreover, Matrix seeks to remain adaptable to evolving market dynamics and ASIC’s ongoing reviews of private markets, ensuring our approach aligns with best practices and regulatory expectations.

At Matrix Capital Management, we specialize in flexible credit solutions to help borrowers in 2025. Here’s how we can support your project:

Our Offerings:

1st Mortgages: $500k - $5,000,000 | <80% LVR | Rates from 9.95% p.a.

2nd Mortgages: $400k - $1,000,000 | <80% LVR | Rates from 1.50% p.m.

Key Benefits:

Loan terms: 3-24 months

Unlimited cash-out for commercial purposes

Capitalised Fees and Interest for better cashflow

Asset-based lending with no serviceability tests

Broker commission paid directly to broker at settlement

Loans greater than $5m considered

BROKERAGE from 1.10%+

Because we control credit and source funding, we help directly with your credit scenario without the need of a back and forth credit bureaucracy!

Let’s talk about how we can grow your clients goals this year. Feel free to reach out. See our product sheet below. 

Contact us today on [email protected] or visit our website www.matrixcm.com