In this engaging fireside chat, Joe Millward, Founding Partner at Epsilon Direct Lending, shares his insights on the evolution of the private credit industry in Australia. With a wealth of experience in the UK and Australia, Millward offers a unique perspective on the current state of the market, its growth prospects, and the opportunities that lie ahead.

Key Takeaways:

• Growth of Private Credit in Australia: Millward believes that private credit will continue to grow in Australia, driven by the undersupply of capital to the mid-market segment. He expects the market share of private credit to increase, although it won’t reach the same levels as in the US and Europe.
• Epsilon’s Niche: Epsilon focuses on providing growth capital to performing businesses, competing directly with banks on value proposition and service-driven value proposition.
• Talent Acquisition: Millward notes that attracting talent from banks, private equity firms, and debt advisory firms will be crucial for Epsilon’s growth. He believes that the talent pool in Australia is deep and broad, but lacks experience in managing through downturns.
• Recession and Consolidation: Millward thinks that a recession could lead to consolidation in the private credit market, which would create opportunities for Epsilon to capitalize on. He believes that his firm’s experience in managing through downturns would be an advantage.
• Transparency and Disclosure: Millward acknowledges that transparency and disclosure are essential in private credit. He notes that the industry needs to standardize information and provide more clarity to investors.
• Future Strategies: Epsilon is considering expanding into new strategies, such as green infrastructure and energy transition, which align with the firm’s conditions for growth.
• Institutional Investors: Millward expects global private credit funds and insurers to enter the Australian market, attracted by the superannuation industry and the supply-demand dynamic.

Key timestamps:

00:09 Introduction
01:31 Observing Market Cycles: UK vs Australia
02:57 The Unique Landscape of Australian Lending
04:57 Strategic Focus of Epsilon in the Market
06:47 Challenges of Establishing a Track Record
08:25 Talent Acquisition in the Private Credit Sector
09:58 Recession Preparedness in the Market
13:16 Opportunities Amidst Market Corrections
15:29 Barriers to Entry in Private Credit
16:48 Transparency in the Private Credit Market
19:07 Market Trends and Predictions
19:51 Investment Strategies in Private Lending
21:18 Evaluating New Investment Strategies
22:32 Growth of Secondaries Market
24:56 Real Estate Market Outlook
25:54 The Future of the Epsilon Brand