Funds managed by Apollo Global Management have committed A$75m (€41.5m) to MaxCap Group’s flagship commercial real estate debt vehicle.
The Apollo funds had previously issued a mandate to MaxCap Group when the US firm bought a 45% equity stake in the Australian non-bank lender in 2021.
The latest transaction is the general partner’s first direct investment in the open-ended MaxCap Investment Trust (MIT).
Rob Hattersley, group head of capital at MaxCap Group, told IPE Real Assets the latest Apollo investment had come at a time when MIT had reached a billion dollars in assets under management.
“Apollo’s investment shows strong partner alignment and validates the quality of this platform,” said Hattersley, adding that MIT’s first mortgage and high yield funds had both returned more than 11% net of fees since inception around two years ago.
Hattersley said MIT’s wholesale investors include global pension funds and insurance companies. It has also attracted capital from Asia.
The Australasian debt vehicle is invested in more than 80 different loans, with the majority in Australia’s living sector, largely centred on the eastern seaboard. Around 90% of MIT’s assets under management are currently in its first mortgage fund, with a smaller allocation to mezzanine loans in its high-yield fund.
Hattersley said MaxCap Group had a current pipeline of lending opportunities valued at around AA$8bn. However, the manager is highly selective, funding on average one out of every five projects that sought financing.
In recent times, the non-bank sector has been buffeted by a string of builders and development companies going into bankruptcies and liquidations following sustained inflation and subsequent monetary tightening in 2022 and 2023.
“There is no question that the market experienced some pressures through construction lending and other areas over the course of the last few years due to the impact of construction cost inflation and the high cost of funding on the development sector,” said Hattersley.
“It highlights the importance of disciplined underwriting and the benefits of investing in well-diversified portfolios with strong downside protection and sponsor quality. MIT’s approach has consistently focused on conservative structuring and building scale through diversification.”
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