Angela Ashton
Specialist alternatives research firm Evergreen Ratings has assigned a “Commended” rating to the Wentworth Williamson Stable Income Fund, saying it has a “very high degree of conviction” that the Fund will deliver on its 6%-plus income target.
Wentworth Williamson is a relatively new player in the growing private debt market, with a fund that specialises in funding non-bank lenders. It was established by a group of former Investec executives in 2013 and the Stable Income Fund (one of two funds the firm manages) was launched in 2018.
Currently, the Stable Income Fund has one major investment, providing funds to Credabl, a specialist lender to medical professionals. The Fund is targeting an income return of the bank bill swap rate plus 6% (net of fees of 1%).
Evergreen says the Fund’s security over its financing is “extremely strong”, being based on a three-tier waterfall: personal guarantees; collateral over financed items; and life insurance.
It says it has “a very high degree of conviction that the Fund will deliver on its target return.”
And it adds Credabl’s track record is strong, reflecting the low default rate among medical professionals.
Wentworth Williamson provides its funding through private market asset-backed securities warehouse structures. Evergreen says a significant investor protection built into ABS warehouse funding is the originator’s first loss investment, in addition to the usual collateral-related protections.
Evergreen Ratings has a positive view of Australian private debt as an asset class.
The firm’s Founder and CEO Angela Ashton says that in recent years, with authorised deposit-taking institutions (ADIs) facing more onerous regulatory guidelines, the domestic market has seen more borrowers seeking funds outside traditional banking sources.
“The market dynamics are supportive of attractive risk-adjusted loan pricing which presents an opportunity for a capital provider to earn excess returns,” Ashton says.
“We do not believe the fundamentals of this market in Australia will deteriorate over the foreseeable future,” Ashton says.
“The Wentworth Williamson Stable Income Fund is designed to provide attractive risk adjusted stable returns in the form of a monthly payment to our clients,” adds Rob Hamer, Portfolio Manager at Wentworth Williamson.
“Our value proposition focuses on specialised non-bank lenders and other opportunities where the provider has a right to win and where our clients are afforded strong first loss protection. We believe this product should fit nicely as part of a portfolio as a diversifier away from traditional bank hybrid and other domestic property focused income exposures. We are pleased to have been able to work with Evergreen as a ratings partner,” notes Hamer.