In a recent fireside chat hosted by Giovanni Amodeo, Andrew Lockhart, Managing Partner at Metrics Credit Partners, delved into the burgeoning opportunities within the Australian private debt market for global investors. The discussion, part of the Ion Influencers series, highlighted the evolution and strategic approaches of Metrics Credit Partners.

Key Discussion Points:

1. Origins and Growth of Metrics Credit Partners:

• Founded in June 2013, post-global financial crisis, to address the funding gap left by foreign banks.
• Currently manages $19 billion, investing across the capital structure in Australian and New Zealand companies.
• Active in corporate finance, acquisition financing, project and infrastructure funding, and commercial real estate.

2. Evolution of Private Credit Market:

• Post-2008 financial crisis, regulatory changes led banks to reduce their lending activities, creating opportunities for private lenders.
• Metrics Credit Partners has focused on educating investors about the benefits of private credit, emphasizing stability, attractive income, and low correlation with other asset classes.

3. Current Focus and Market Dynamics:

• Metrics primarily targets large corporate and institutional clients, including ASX-listed companies and significant private equity-backed firms.
• Involved in major projects like Westconnex, Northwest Rail link, and various real estate developments addressing Australia’s housing demand.

4. Private Equity Relationships and Deal Structuring:

• Maintains strong relationships with both local and global private equity firms, providing tailored financing solutions including fund financing.
• Success in private equity deals is measured by the ability to offer competitive terms and conditions that satisfy both the equity firms and Metrics’ investors.

5. Future Outlook and Strategic Directions:

• Continued focus on real estate due to current market dislocations offering attractive opportunities.
• Plans for further expansion into international markets, particularly in asset-backed credit for SMEs and consumers, and growing the real estate equity platform.
• Exploring acquisitions of smaller private credit platforms overseas to cater to domestic investors seeking international exposure and to attract foreign capital.

Andrew Lockhart’s insights reveal a robust strategy leveraging regulatory changes and market dynamics to position Metrics Credit Partners as a leader in private credit within Australia and increasingly on a global scale. The firm’s comprehensive approach across various sectors and its strategic international expansion plans underscore its commitment to providing diversified, risk-adjusted investment opportunities to its clients.

Key Timestamps

00:09 Introduction to ION Influencers Fireside Chats
00:34. Background of Metrics and Its Role in Private Debt
01:58 Evolution of Private Credit Space
03:32 Regulatory Changes and Impact on Private Credit
04:32 Educating Investors About Private Credit
06:28 Addressable Market and Types of Companies Financed
09:01 Coverage and Relationships with Private Equity Firms
12:09 Growth in Private Equity and Role of Intermediaries
13:58 Role of Intermediaries in Private Equity
15:24 Bilateral Discussions and Market Interactions
16:00 Strategies and Deal Size Considerations
17:42 Impact of Technology on Workflow Process
18:34 Role of Banks and Stringent Regulation
20:19 Concerns of Investors in Private Credit
21:34 Nervousness and Red Flags in Private Credit
23:19 Decision Making and Deal Evaluation
26:05 Business Strategies and Market Opportunities
28:53 Consolidation in the Market and Future Acquisitions
30:33 Expansion and Brand Development