Author: ryan

Msquared Capital has announced a joint venture with EG Funds to further enhance Msquared’s offering to investors by utilising EG’s proprietary platforms, PRISMS, to assist the team in applying an equity and debt lens on each prospective loan. The platform’s unique data, collected over more than 20 years, will also ensure that risks and credit quality are thoroughly assessed to safeguard investor funds.

The joint venture also means that EG Funds will be able to offer investors the opportunity to diversify into the private debt market to service capital products for quality residential real estate and industrial sites across the eastern seaboard of Australia

Australia’s Debt Market

The debt market has historically been tightly held by major banks, but it is becoming increasingly prevalent for borrowers to access credit through non-bank lenders due to the traditional lenders placing strict criteria on capital products. These restrictions have become more rigorous during the volatile market, which leaves borrowers and mortgage brokers turning to alternative lenders for funds.

Paul Miron, Managing Director, Msquared Capital, said:

“The appetite for private debt has skyrocketed over the past few years with no signs of slowing. This joint venture with EG enables us to capitalise on this growing demand, working together to provide more opportunities for both borrowers and investors. Against a backdrop of market volatility, investors seek opportunities to diversify and secure strong returns, and private credit backed by property offers great appeal.”

Rodney Walt, Head of Private Wealth, EG, said:

“EG constantly explores new opportunities to uncover great returns for our investors within the real estate market during a variety of market conditions. After extensive consultation, we are confident that Msquared Capital is the right cultural fit for a joint venture due to our aligned core values that will help solidify a strong partnership that generates outstanding, consistent returns and a positive impact.

As lending from the major banks declines, we have recognised a funding gap within the market. That’s why private debt has been viewed as the ideal opportunity for our investors. The joint venture supports an underserved market, with capital secured by quality real estate in Australia to further enhance returns for our investors.”

About EG Funds

Founded in 2000, EG has $5.1 billion under management, servicing institutional investors and wholesale clients by generating outstanding returns with lasting social impact. With $3.9 billion in the development pipeline and 16.7% per annum in realised IRR for institutional funds, EG is committed to finding a better path to better returns.

About Msquared Capital

Msquared Capital is a private credit provider founded in 2017, offering investment opportunities backed by quality property along the eastern seaboard of Australia. Operating three funds; High Yield, Contributory, and the Conservative Fund, which has received an Evergreen rating, Msquared Capital offers strong risk-mitigated returns of up to 9 per cent. Msquared Capital offers these opportunities with the combined experience of the directors and leadership team, spanning a total of 100 years in banking, finance, property, and funds management.

 

 

How Rapid Rate Rises Put Banks in Peril

For the first time since the GFC, the fragility of the global banking system has come into question as the 16th largest bank in the US collapsed, and one of Europe’s premier investment banks, Credit Suisse, sought rescue from the Swisse National Bank.

How is it that a bank with a 166-year history, managing $1.6 trillion only a year ago, rapidly came crashing down?

It is time to say it – Enough is Enough! We do not need any more rate increases! 

The official RBA Cash Rate has increased for the 10th consecutive time – unprecedented in our modern economic history. We have now reached a stage where it is becoming unnerving as to when our path of rate increases will halt. More disturbingly, this is happening worldwide – not just in Australia.

Central bankers are becoming unhinged and seem to disregard the inevitable financial consequences of a recession as long they win the short-term battle against the unfriendly foe of inflation.

As the dust settles from our post-Australia Day celebrations, we ease into the New Year refreshed and invigorated with our resolutions and plans in motion. We begin to reflect on and update our personal and financial goals for the year and ponder the new year challenges for all of us.

The New Year brings a significant concern for businesses, mortgage holders and consumers. It brings much speculation and uncertainty regarding whether further interest increases will work to stabilise inflation or ultimately tip the Australian economy into a recession.

Despite the rhetoric from central bankers and global leaders blaming the world’s current economic woes on inflation, a war in Europe, an energy crisis and irrational consumer sentiment, there is an obvious alternate root cause to the world’s current financial dilemmas.

Higher Interest Rates
Excessive use of monetary loosening during the COVID-19 era has resulted in skyrocketing inflation. Unfortunately, there is not a clear antidote to this other than placing our faith in the blunt economic instrument of interest rates.

In our July board meeting with our Chairman, we discussed a recent article, titled “Super Shake Up”, featured in the Australian Financial Review. It ranked the performance of the 50 largest ‘balanced’ (or ‘growth’)1 Superannuation Funds in Australia, with only 3 reporting an absolute profit (of 1.6%, 0.6% and 0.5%) for the 12 months to June 30, with the remaining 47 recording losses for their investors.

I am sure Super Funds and Investors will be closely examining the results to identify the ideal composition of a portfolio to outperform competitors and the index.

For the past 40 years, inflation in the western world has not triggered any emotion…until now. Naturally, the question we must ask is: What exactly has caused the sudden panic, fear, and obsession with the subject of inflation?

In central banks’ pursuit of taming inflation, we have seen the blunt instrument of raising interest rates being applied worldwide. This has negatively impacted most asset classes, especially property and shares.

Paul Miron discusses current trends in inflation and interest rates.

As we return to work after a Federal Election and the appointment of a new government, there still seems to be no end in sight regarding the war in Ukraine…not to mention an energy crisis, world food shortages, supply chain issues…COVID-19…and rising costs of living, with persistent high inflation, and to top it all off – the prospect of further interest rate hikes. It seems that our economic future has never been more uncertain. Or are things really all that bad for investors?

Amidst a war in Eastern Europe, our central bank is grappling with the impacts of a rising cost of living, a severe energy crisis (not experienced since the 1970s), official inflation hitting 3.5%, and lastly, COVID-19 and its variant accomplices. This is not to mention the constant heartaches inflicted by fires and floods over the past three years and their financial implications on the economy.

Thus, we must ask ourselves – how will this impact everyday Australians? What will be the effect on interest rates, property prices and the general economy?