Global alternative asset manager MA Financial Group has established a A$1bn Australia Real Estate Credit Vehicle (Vehicle).
MA Financial will manage and co-invest in the vehicle, while Warburg Pincus, a leading global growth investor and one of the largest investors of real estate private equity in Asia, will facilitate offers to certain Warburg Pincus funds and has indicated their intention to invest in notes issued by the vehicle.
It will provide institutional investors across the globe with unique access to Australia’s real estate credit market, funding high-quality developers and residential real estate projects.
As part of the facilitation agreement, Warburg Pincus will be entitled to options of up to five million MA Financial Group shares at a strike price of $6.00 upon meeting certain milestones relating to commitment and deployment of capital.
Julian Biggins, MA Financial’s joint chief executive officer said, “We are very proud to be collaborating with Warburg Pincus – one of the world’s most successful and respected real estate managers. This initiative is a strong endorsement of and testament to MA Financial’s proven track record and significant expertise and capabilities in real estate credit investing.
Through the Vehicle, we will originate and manage credit facilities for high-quality real estate developers and projects with a focus on Australia’s residential build-to-sell sector, aiming to help close the funding gap in the acutely undersupplied housing market.”
Institutional investors will be invited to participate in the Vehicle via a note issuance with an initial target of at least A$700 million. Warburg Pincus will facilitate the offer of notes in the Vehicle to several existing Warburg Pincus funds as well as select investors in their network.
Biggins said, “With the projected rate of annual population growth in the next five years expected toincrease by over 30% on that of the last five years, it is estimated the cumulative dwelling shortage to beapproximately 254,000 units for the same period. As the tightening of lending practices by traditional bankscontinues, there is an estimated US$37 billion funding gap projected by 2025 that non-bank lenders are looking to address.
“Our new Vehicle will help meet the demand for non-banking lending options from sophisticated borrowers as Australia addresses a nationwide housing shortage. The significant demand for housing in Australia’s residential property market provides strong tailwinds for this strategy.”
Anthony Habis, MA Financial’s managing director and head of global partnerships said: “This initiative provides institutional investors around the globe with unique access to the combined expertise and track record of MA Financial and Warburg Pincus. Warburg Pincus have a track record of being selective in partnering with management teams to build out strategies, and this is an exciting development for MA
Financial”.
Takashi Murata, Warburg Pincus’ Co-Head of Asia Real Estate said: “We are pleased to support MA Financial in establishing this Vehicle, which will provide a unique opportunity for (Warburg Pincus’ funds and other) institutional investors to gain access to Australia’s burgeoning real estate private credit market. MA Financial has a highly experienced team and a strong track record investing in Australian real estate credit and we believe the Vehicle is well positioned to close the funding gap in the acutely undersupplied Australian residential market.”