Private credit for wholesale investors

Private credit is lending that does not go through a bank. An investor supplies the capital, a borrower pays interest on it, and the loan sits outside the listed market where its value is set by a contract rather than by sentiment.

Barker Wealth gives wholesale investors access to Australian private credit funds across corporate lending and real estate credit, selected on the security behind the loans rather than on the headline yield.

What we access

Corporate private credit

Senior secured and unitranche lending to established Australian businesses, typically floating rate, with covenants and security over assets or cash flows.

Real estate credit

First mortgage and mezzanine lending against residential, commercial and development property, secured by registered mortgage at a stated loan to value ratio.

Fund selection and due diligence

Every manager is assessed on the loan book, not the marketing. We read the security, the concentration, the arrears history and the redemption terms before we consider the return.

What you are actually buying

A private credit fund is a book of loans. Your return is the interest those borrowers pay, less the manager’s fees, less whatever does not come back. That is the whole model, and it means the only questions that matter are about the borrowers and the security.

This is the part most investors skip. Two funds quoting a similar target return can hold entirely different risk: one lending at 55% of a valuation against a completed, tenanted building, the other lending at 75% into a development that has not been built yet. The yield looks alike. The downside does not.

The questions that separate one fund from another

These are the questions we put to every manager before a fund reaches an investor.

• Security and rank. First mortgage, second mortgage, unsecured? Where does this capital sit if the borrower fails?
• Loan to value. What is the weighted average LVR, on what valuation, dated when, and who performed it?
• Concentration. What share of the book is the largest borrower, the largest sector, the largest geography?
• Arrears and provisioning. What is currently in arrears, what has been extended, and does the manager disclose it without being asked?
• Liquidity terms. What are the redemption windows, the notice periods, and the circumstances in which the manager can gate or suspend?
• Fee stack. Management fee, performance fee, and any fees the manager earns from the borrower rather than from you.
• Alignment. How much of the manager’s own capital sits in the fund, and in what rank?

Where private credit sits in a portfolio

Private credit occupies the space between a bond and an equity holding. It pays more than investment grade fixed income because the borrowers are smaller, the loans are less liquid and the lender is doing work a bank would otherwise do. It is not a substitute for cash, and it is not a defensive asset in the way a government bond is.

Used well, it produces a regular income stream that does not depend on an equity market rising. Used badly, it concentrates an investor into a single sector at the point in the cycle where lending standards have already slipped.

The risks you are taking

Private credit has been sold hard in Australia over the past few years, often on yield alone. These are the risks we put in front of an investor before the return.

• Credit risk. Borrowers default. Security reduces the loss, it does not prevent it, and recovery takes time.
• Liquidity risk. Your capital is committed. Redemption windows can be suspended, and they are most likely to be suspended precisely when you want your money.
• Valuation risk. Loans are usually carried at par until a manager decides otherwise. A stable unit price is not the same thing as a stable loan book.
• Concentration risk. Many Australian funds are heavily weighted to property development in a small number of postcodes.
• Cycle risk. Loan books written late in a credit cycle carry the weakest terms. What matters is when the loans were written, not when you bought the fund.

Target returns are not indicative or guaranteed. Past performance is not a reliable indicator of future performance.

Who this is for

Private credit is available to wholesale and sophisticated investors as defined by the Corporations Act: broadly, net assets of $2.5m or more, or gross income above $250,000 p.a. in each of the past two financial years, certified by a qualified accountant.

It suits investors who need income now and can leave the capital alone for the term. It suits investors already heavy in listed equities who want a return that comes from a contract rather than a share price. It does not suit anyone who may need the money back at short notice.

How it works

Step 1. Verify and understand.

We confirm your wholesale or sophisticated investor status and build a picture of your income requirements, your time horizons and the risk you already carry.

Step 2. Research and recommend.

You receive funds with our due diligence on the loan book, the security, the manager and the terms, alongside general advice on how much private credit belongs in your portfolio and why.

Step 3. You decide, we execute.

You approve each investment. We handle the application, administer the holding, monitor manager reporting and distributions, and report performance transparently.

Frequently asked questions

Is private credit safe?

It is secured lending, which ranks ahead of equity, and it is not capital guaranteed. A first mortgage at a conservative loan to value ratio against a completed asset is a different proposition from an unsecured loan to a start-up, even though both are called private credit. The security and the borrower decide the risk, not the label.

How is a private credit fund different from a bond?

A bond is a single issuer with a stated coupon and a stated maturity date, held in your name. A private credit fund is a pooled book of many loans, managed on your behalf, with no single maturity date and a unit price the manager strikes. A bond gives you certainty about one borrower. A fund gives you diversification across many, and a layer of manager discretion between you and them.

Can I get my money out early?

Usually not on demand. Most funds offer periodic redemption windows with notice periods, and most retain the right to gate or suspend redemptions if too many investors ask at once. Treat the stated term as the real term.

What returns should I expect?

Target returns vary by security, rank and borrower quality, and any fund quoting a return well above its peers is taking more risk to get there. We show you where the extra return is coming from before we show you the number. Target returns are not indicative or guaranteed.

Can my SMSF invest in private credit?

Yes, where it is consistent with the fund’s investment strategy and its trust deed, and where the fund meets the wholesale investor test in its own right. The illiquidity needs to be weighed against any pension payment obligations.

What does Barker Wealth charge?

Our fees and any benefits we receive are set out in our Financial Services Guide, available on this website or by calling (02) 8018 8998.

Private credit is one part of the income picture

Investors who come to us for private credit often hold it alongside individual bonds, structured products and commercial property. Read more about Corporate Bonds and Fixed Income, Structured Investments and Commercial Property, or see how the whole portfolio fits together on our Investments page.