Mick Wright-Smith
The sixth Intergenerational Report (IGR), recently released, maps what Australia will look like in 40 years.
The Report stated that five major forces that will shape the Australian economy over the coming decades are: ageing population, expanded use of digital and data technology, climate change and the net zero transformation, rising demand for care and support services, and increased geopolitical risk and fragmentation.
Specialist Australian middle-market corporate direct lending fund manager, Epsilon Direct Lending, says the Report provides a clear direction for future economic growth.
Epsilon co-founder Mick Wright-Smith notes “The composition of Epsilon’s current direct lending loan portfolio is reflective of the predicted shape of the Australian economy over the coming decades.
“For example, Epsilon has made capital investments into growing healthcare and data tech businesses.
“The continued transition to a services economy over the next 40 years will require investment to drive business growth in real-economy operating businesses.
“Private credit and in particular direct lending will become an increasingly important pathway for capital to drive this growth in the future services focussed economy. Businesses will continue to value funding from non-bank sources due to the speed and efficiency of dealing with private credit lenders such as us, appreciating our deep and ongoing level of engagement with portfolio of borrowers.
“Spending on aged and service pensions is projected to fall as a share of GDP despite the ageing population because we believe superannuation will increasingly fund retirement.
“Retirees will seek regular income over growth portfolios as they age. Direct Lending as an asset class provides a defensive income solution to this increasingly larger pool of retirees that will live longer,” says Wright-Smith.
