Alternative investment manager Alceon has announced the launch of its debt income fund with 5% to 7% per annum target return as institutional investors and family offices have been increasing their capital allocation to secured private debt.
The portfolio of underlying loans in the fund would be primarily secured by registered first-ranking mortgages held over Australian property, mostly on the east coast of Australia, with the loans finance being a mix of real estate development, construction and ownership.
The Alceon Debt Income fund would follow a bottom-up process, conducting fundamental analysis and due diligence on potential opportunities with an active program to monitor the progress of projects, assets and delivery partners and would invest in secured senior and second-ranking loans where the loan-to-valuation ratio would not exceed 65%.
The fund would also invest in loans issued by mid-market real estate owners and developers to finance real estate assets in Australia and some limited exposure to New Zealand.
Omar Khan, Alceon group director and head of wholesale capital, said that since 2016, when the Australian Prudential Regulation Authority (APRA) introduced lending controls, non-bank market share in Australia increased from 4% to circa 8% but was still well below global standards where non-banks command a 20% - 30% market share.
“In search for alternative solutions, institutional investors and family offices have been increasing their capital allocation to secured private debt, but so far wealth advisory groups have had limited access to this sector,” Khan said.
“To fill this gap, we are very pleased to launch the Alceon Debt Income fund, a retail fund that aims to deliver regular monthly income from a diversified and conservative portfolio of debt secured by real estate.”
The fund was available on Netwealth and HUB24 with plans to provide broad platform access to wealth groups across Australia. The minimum investment was $10,000.