Macquarie Group has tapped a former Investec executive to lead its expansion into the Australian and Asia-Pacific fund finance markets.
Steven Mansy joined the Australian bank on Wednesday as head of fund finance origination APAC in Sydney, he told Private Equity International. Mansy previously led Investec’s fund finance business in Australia as a member of its corporate and acquisition team.
“We focus a lot of our attention on US and European managers, and now as we’re seeing the Australian market grow we thought it made sense to grow that part of the book,” Jeremy Tan, Macquarie Fund Finance’s global head of structuring, said.
“We’ll primarily focus on the Australian and New Zealand market, but the mandate is quite broad.”
Mansy’s arrival follows Investec’s decision in December to pull out of Australia and focus on the UK, with the bank having sold its local corporate and acquisition loan book to Metric Capital Partners this year. An Investec spokesperson confirmed Mansy’s departure.
Fund finance globally has been in high demand of late. As of December, just over half of investors expected to see an increase in the use of subscription lines over the next 12 months, according to PEI’s LP Perspectives 2021 Study. Niche forms of fund financing, such as NAV-based lending, have transitioned to mainstream during the pandemic as GPs seek urgent liquidity at a time when traditional lenders took a step back.
“Unlike the more mature US and European markets where they’re more heavy users of hybrid-NAV lending solutions, the Australian fund finance market currently favours LP bridging facilities given the $13 billion in available dry powder to deploy,” Mansy said. “However, post-investment period, we anticipate managers’ financing needs to translate from typical capital call facilities to NAV solutions as the focus shifts towards follow-on investments and a bridge to exit.”
The growth of Asian secondaries transactions – predominantly led by Chinese GPs looking to deliver liquidity to domestic LPs or convert yuan-denominated assets into their debut USD-denominated fund – could also present a future opportunity for lenders that specialise in niche facilities.
“In the US and Europe, a lot of managers look at us as a specialty fund finance lender, where we focus more on secondary fund NAV facilities, GP-led restructurings and continuation funds, rather than capital call lines,” Tan said.
“As there is not as much appetite amongst Australian managers to do these more bespoke financing arrangements, we plan to focus more on capital call lines for Australian middle market managers. We’ve always had aspirations to break into the Asian market and so I expect that as that market gets more comfortable with fund-level financing products, we’ll naturally make our way there too.”