ASIC focus on private credit and CapPru’s approach

ASIC’s Reports 814 and 820 issued recently on private credit have prompted healthy discussion about standards across our market. We welcome that scrutiny. It affirms the principles we already apply in our underwriting, monitoring and governance, and it encourages the industry to keep lifting the bar in ways that protect investors and borrowers alike.

At CapPru we start from a simple place. We are stewards of other people’s money. That lens shapes how we originate, structure and manage investments, and how we report to stakeholders. Our team’s background in real estate development and lending means we understand how projects succeed or fail in practice. We focus on sponsor quality, capital structure, security coverage and build risk, and we act early if the risk picture changes. This is reflected in conservative covenants, active borrower engagement and a clear escalation pathway when credit risk migrates.

We also believe investors should be able to see and understand what they own. Our Information Memoranda set out the strategy, fee arrangements and risk limits. Management fees are charged to the Fund, and loan establishment fees paid by borrowers are retained by the manager and disclosed. Each year we aim to report total fees earned as a percentage of Funds under management so that you can compare costs across managers with confidence. Day to day, our regular communications provide portfolio context, not just headlines, so that performance and risk are visible rather than implied.

Conflicts of interest are a critical item to manage appropriately. We operate a Conflicts Policy and a Related Party Transactions Policy, overseen by a Conflicts Committee with an independent chair and all independent members. These arrangements guide decision making and disclosure so that investor interests remain paramount.

Strong outcomes depend on strong governance. Our structure includes independent trustees and custodians, a Board that is majority independent, and separate Investment Committees for each strategy, each chaired by an independent member. These bodies receive full credit and portfolio reporting and provide direction where appropriate. This framework brings independent rigour to our processes and creates a clear line of accountability from origination through to repayment.

Credit risk and valuation are inseparable. Independent valuations support all loans at origination. As part of our quarterly credit risk assessment on our portfolio, we consider revaluation triggers, commission fresh independent valuations where risk has increased, and reflect outcomes in risk ratings, monitoring intensity and impairment decisions. The Investment Committees receive quarterly portfolio credit and impairment reports that cover monitoring outcomes, credit scores and recommended actions.

We support raising standards, improving transparency, and creating a better environment that help investors make informed choices. Our participation in AIMA’s Australia working group allows us to contribute to that discussion and adopt sensible improvements that emerge from the collective work on best practice.

We will keep doing the work that matters most in private credit: disciplined underwriting, active risk management, and clear, useful communication with our investors.