With the help of a handful of local brokers, ASX-listed, MA Financial (ASX: MAF) plans to raise around $300 million for a listed private equity trust, which it plans to list on the ASX later this quarter.
This latest push by MA Financial further into the private credit (aka non-bank) and debt markets is expected to take the alternative asset manager's funds under management (FUM) from $9.9 billion to $15 billion by the end of $2026.
Plans for a float are said to be well underway, and MA Financial has already engaged a handful of brokers as joint lead managers alongside in-house MA Moelis Australia Advisory.
Investment options
It’s understood investors will be able to access the soon-to be-listed stock's (MA1) $3.7 billion portfolio of private credit strategies via three separate baskets.
In addition to the lending directly against a property (direct asset lending) and investing in credit instruments backed by a portfolio of loans (asset-backed lending), investors will also have access to direct corporate lending (lending directly to a business).
While over 50% of the portfolio is in asset-backed lending, the direct asset lending allocation is around 40%. Overall, there are 165 underlying credit investments spanning 16 sub-sectors, including supply chain finance, real estate loans, mortgages, and auto.
MA1 is expected to be targeting distributions of 4.25% - compared to MA’s Master Credit Trust 9.4% return in financial year 2024 - while investment management fees are estimated to be around 1.2% plus 0.45% in performance fees.
Diversified business models
Despite being a stock sitting just outside the ASX 300 (with a market cap of around $1 billion), broker coverage of MA Financial is minimal. Some brokers see similarities between MA Financial and Macquarie Group with both companies displaying diversified business models based around a strong alternative asset management franchise, plus profitable domestic banking operation.
Not unlike Macquarie, MA Financial also seems to favour more niche investment areas and building differentiated platforms.
The three brokers covering the stock, as reported on by FN Arena, suggest the stock is currently trading with 13% upside the target price of $6.74. The share price is up around 6% over one year.
Highlights within the company’s last quarterly update included record gross fund inflows for 9 months to 30 September 2024 of $1.6 billion, up 25% on the previous year.
Meanwhile, to try to keep the trust trading close to its net asset value (NAV) the company has committed to quarterly off-market buybacks - at NAV - for up to 5% of issued capital. The firm is targeting a settlement date of February 27.