Brian Ho, Associate Director at Aura Private Credit, shared insights on the burgeoning potential of Australian private credit markets during his presentation at the Peak Rate Alternatives Symposium in Singapore.
Brian Ho, Associate Director at Aura Private Credit, shared insights on the burgeoning potential of Australian private credit markets during his presentation at the Peak Rate Alternatives Symposium in Singapore. Speaking at a panel hosted by PhillipCapital and Havenport Investments, Ho emphasised how the introduction of Basel III has left a significant gap in traditional bank lending in Australia, creating new opportunities for private lenders.
Ho began by outlining the structural shifts in lending dynamics following the Global Financial Crisis (GFC). Basel III, a regulatory framework introduced to mitigate risks in the financial system, has made it more expensive for banks to extend loans to businesses, particularly small and medium-sized enterprises (SMEs). As a result, Australian banks have largely retreated from non-residential lending, leaving a substantial void that private credit funds are poised to fill. He cited that non-bank lending currently accounts for just 9% of the total Australian lending market, compared to 91% in the United States and 65% in Europe.
According to Ho, the nascent stage of the Australian private credit market offers significant growth potential. He explained, “The opportunity for growth in Australia is huge. The strong demand and limited supply paves way for strategic opportunities.” Ho highlighted that Aura Private Credit has been able to deliver impressive solutions and results since its inception in 2017.
Addressing concerns about liquidity, Ho noted that private credit can provide resilience in times of market stress. Unlike public instruments, which may require selling at a significant discount during downturns, Aura’s private credit strategy focuses on short-duration loans, ensuring that assets can be gradually unwound without compromising their value. “We have not lost a dollar of capital since inception, including during COVID,” he added, underscoring the strength and stability of Aura’s portfolio management.
Ho concluded his presentation by discussing Aura’s disciplined approach to credit underwriting—a critical factor in maintaining portfolio quality amidst the sector’s rapid expansion. With many new players entering the market, Ho cautioned against undisciplined lending practices, which could negatively impact the broader industry. Aura, he asserted, relies on a combination of quantitative analytics and qualitative boundaries to ensure that its portfolio remains robust and capable of delivering consistent returns to investors.
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