MA Financial's Frank Danieli: Brokers 'are a very important community for us'

Alternative asset manager's hot new fund targets private credit market

MA Financial's Frank Danieli: Brokers 'are a very important community for us'

MA Financial’s managing director Frank Danieli (pictured) is cheering the upcoming launch of the alternative asset manager's debut listed investment trust ‘MA Credit Income Trust’, which is set to go live on the Australian Securities Exchange (ASX) in early March.

Under the MA1 ticker symbol, the fund, which will be MA’s first-ever LIT, will give stock market participants access to the company’s $3.7 billion worth of private credit investments.

Demand has already been rolling in, with $171 million worth of cornerstone commitments secured from investors chasing MA’s target of 4.25% annual returns (pre-tax) above the Reserve Bank of Australia’s cash rate.

That’s more than half of MA’s $300 million target, which the firm hopes to achieve during an offer window between January 28 and February 10.

It’s risky business, tapping the capital markets at a time when many companies are running for the hills and new listings are few and far between.

But speaking on the rationale behind launching a LIT on the ASX at a time when investor appetite is low, Danieli explained to MPA that it was actually a demand-side move on behalf of the alternative asset manager.

Liquidity is key

While MA's unlisted private credit funds remain in high demand, clients “have been asking us for quite some time now for something different”. 

That something, to put it simply, is liquidity. Clients like the products that MA has on offer and the underlying strategies, but they simply want them in a more liquid form with instant price discovery.

It’s been “really client led”, said Danieli of the MA1 listing. “In developing this fund in consultation with our key investors and industry stakeholders, we’ve prioritised two key aspects critical to them, being transparency and liquidity. These are fundamental to the investment proposition.”

As for the underlying strategies that MA1 will provide exposure to, the $3.7 billion portfolio comprises a mix of direct-asset lending and asset-backed lending (the latter accounting for 56% of the portfolio).

The fact that MA is providing substantial warehouse financing to asset-backed loans speaks to a trend that has developed over the past decade.

Given the shifting tides of regulation and general market mechanics, traditional lenders like the big-four banks have become hamstrung when it comes to asset-backed finance, opening the door for alternatives like MA.

The rise of the broker channel, too, has played a part in this shift, noted Danieli.

It’s just “more efficient” for someone else to provide that lending, he said, adding: “As we move into a more technology-oriented world and as the broker channel comes to dominate lending origination, there’s more choice.”

Leave it to the specialists

Gone are the days when a customer seeking asset finance will walk into a bank. “Rather they’ll go to their broker or they’ll go to their trusted intermediary and that intermediary will help them access the full spectrum of lending,” Danieli explained.

It speaks to the fundamental driving force behind the growth of the third-party channel. The banks are still crucial providers of capital, but borrowers want and need the personal touch that comes with working with a trusted broker.

Underscoring just how integral the broker channel is to asset finance these days is the fact that MA brought a high-profile aggregator under its wing a few short years ago.

MA’s $145 million acquisition of Finsure in 2022 availed the group to a broker network tallying some 3,600 subscribers as of today.

Danieli called Finsure “a very valuable piece of lending infrastructure”, not just for MA, but for the Australian economy as a whole. “We think that the broker channel will continue to grow and resonate with customers… brokers are a very important community for us.”

More than ever, asset managers are working with the broker channel on origination opportunities, Danieli highlighted. It appears to be a bond that is likely to get stronger over time.