In a recent fireside chat hosted by Giovanni Amodeo, Patrick William, Co-founder and Managing Director of Rixon Capital, shared his expert insights on the risk-return trends in the Australian market. The conversation covered several important topics:

William’s Background: William detailed his journey from working in public markets M&A with Macquarie Capital in Singapore and Sydney to co-founding Rixon Capital. He highlighted his experience in the private credit space, starting one of Australia’s first private credit funds in 2018 before establishing Rixon Capital with support from a South Australian family office.

Evolution of Private Credit in Australia: William discussed the growth of private credit in Australia, describing it as a form of non-bank lending. He noted that the sector saw significant growth after the Royal Commission into banking misconduct, which led traditional banks to withdraw from SME lending, creating a gap that private credit funds like Rixon Capital have since filled.

Risk Management in Private Credit: Addressing concerns about risk, William emphasized Rixon Capital’s cautious approach. He explained that their fund has a prescriptive mandate, overseen by an independent investment committee and a third-party trustee, ensuring that only appropriate risks are taken. He also highlighted the importance of maintaining a good reputation in the small Australian market, where trust and transparency are crucial.

Handling Bad Deals: Although Rixon Capital has not experienced a bad deal, William shared his approach to managing potential failures. He stressed the importance of transparency with investors, advising that if a deal goes wrong, the best course of action is to immediately inform investors, present a recovery plan, and demonstrate that all due diligence was performed.

Advice for Students: When asked what advice he would give to students choosing a college course, William recommended pursuing an accounting degree. He argued that it provides a strong commercial mindset and versatility, allowing graduates to secure jobs in various fields, from accounting firms to operations management.

This insightful discussion provided a deep dive into the evolving landscape of private credit in Australia and the strategic thinking behind risk management at Rixon Capital.

Key timestamps:

00:08: Introduction to ION Influencers’ Fireside Chats
00:32: Patrick William’s Background and Rixon Capital
01:12: Evolution of Private Credit in Australia
02:21: Skills in the Australian Private Credit Market
03:03: Transition from M&A to Private Credit
03:35: Difference in Mindset for Private Credit
04:58: Niche Identification for Rixon Capital
05:48: Pitching to Investors and Convincing Arguments
06:49: Reaching Out to Potential Investors
08:11: Interest in Private Credit among Family Offices
09:09: Views on Risk and Systemic Impact
10:08: Assessment of Borrower Quality
11:24: Assets Suitable for Asset-Backed Lending
12:40: Competition and Market Dynamics
13:55: Expansion and Ambitions of Rixon Capital
14:59: Building Track Record and Deal Flow
16:22: Efficiency and Team Size
17:05: Impact of Team Size on Deal Flow
17:30: Strategic Considerations for Growth
18:12: Building Brand Awareness
19:20: Progress and Growth
19:48: Evolution of Debt Advisors
20:58: Assessing Borrowers and Red Flags
21:39: Sector Focus and Limitations
22:49: The Value of Sector Expertise
24:13: Incentives and Risk Management
26:14: Dealing with Bad Deals
27:14: Career Advice for Students