Private equity firm Solaris Partners is joining the growing legion of alternative investment firms tapping the burgeoning private credit market in Australia by launching an offering to private clients seeking higher fixed interest returns on their capital.
US-based Solaris Partners has started rolling out a private credit offering to the Australian market to enable investors to maintain yield on their capital as interest rates begin to fall across major global markets including the United States and United Kingdom.
Solaris' private investment division, Solaris Private, began appointing staff in Australia in recent months as it prepares to release a series of low volatility, capital stable opportunities available to clients with $500,000 or more in investable capital.
For some investors, private credit has an attractive risk-return trade-off. It pays a relatively high interest rate and tends to exhibit low volatility relative to publicly traded assets, like corporate bonds.
Solaris Private is expecting to attract investors already familiar with non-traditional banking institutions, or those wanting to make the move into private credit. Private credit has become a popular asset class with Australians seeking low-involvement, capital-stable alternatives to property and stock market investments.
According to the International Monetary Fund (IMF), global private credit assets under management have quadrupled over the past decade to reach US$2.1 trillion (A$3.2 trillion) in 2023.
Solaris Private’s Managing Director of Private Clients, Josh Paola explained how the expansion into the private credit market in Australia is timely, considering interest rates are potentially going to start decreasing in early 2025.
Paola said: "Official interest rates are expected to decrease next year so we are expecting strong demand for our private credit opportunities. We believe that Solaris Private will be well received by the Australian market and a popular choice for Azzet's affluent readership."
According to Bell Potter, the market is now pricing a full rate cut by May 2025 following stronger-than-expected labour market data last week.
Solaris Private’s new high yield fixed interest solution called RateWise offers interest rates from 5.9% (1) for six months to 8.2% (1) for 120 months.
(1) as of 18 November 2024.
As with any investment opportunity, please weigh the associated risks.
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Additional reporting by Lauren Hayes
