ASIC Blocks New Money Into Two Angas Securities Funds Over Alleged Bathla Disclosure Failure

The Australian Securities and Investments Commission ordered Adelaide private credit firm Angas Securities today, Monday, Nov. 9, to stop accepting new investments into two of its funds. ASIC's concern is that Angas did not adequately disclose the funds' financial position to investors, including exposure to the collapsed Bathla Group.

Angas confirmed the orders in a statement. They stay in place for 21 days unless ASIC revokes them sooner.

The firm also told investors to contact it with questions. It warned that they should not assume withdrawal requests are guaranteed.

Angas disputes the size of the exposure

ASIC alleges Angas failed to tell investors about its exposure to the western Sydney developer and the risks that came with it. Those are allegations, not findings.

Angas executive chairman Andrew Luckhurst-Smith rejects the premise. He says the fund had little exposure to Bathla and lost no money on its loans to the developer.

He blames a transcription error in a document Angas gave ASIC for creating a false impression of how large the exposure was.

What Bathla left behind

Teneo was appointed administrator of Bathla's main entity, Universal Property Group, on Aug. 25. Managing director Bhart Bhushan cited a "perfect storm" of softening sales, tax changes and higher construction costs.

At the Sept. 4 creditors' meeting, administrators put preliminary secured lender debt at A$3.1 billion. Court documents show Bathla had 219 projects underway when administrators arrived, including 45 sites under construction. Those sites account for a "significant" portion of the company's debt.

The group sprawled across hundreds of companies and subsidiaries, with a wide network of lenders behind them.

About 40 private credit funds are exposed, with positions ranging from A$1.5 million to A$340 million. The lender list includes PAG, Balmain, Trilogy, Centuria Bass, Ray White Capital, La Trobe Financial and Wingate.

Bathla turned to private credit as banks pulled back from riskier property lending. That is a market choice, and the lenders took the risk for the higher returns on offer.

Redemptions frozen, exposure disputed

The fallout has hit investors' ability to get their money out. CVS Lane and Centuria Bass froze redemptions after the collapse. MA Financial capped withdrawals from its A$2.3 billion secured property loan fund at 1% a month.

MaxCap Group, 45% owned by Apollo Global Management, has since confirmed a round of redundancies. A spokesperson said the cuts were "a small number of redundancies predominantly in growth areas" and followed senior appointments including a new CEO, Head of Investment Management and COO.

The spokesperson said MaxCap has "one of the smallest" exposures among the Bathla lenders: a A$23 million land facility with development approval, about 0.28% of total assets under management. The company disputes the size of the cuts claimed in earlier reporting.

Stress has also reached managers with no Bathla link. Metrics Credit Partners, which manages about A$40 billion, froze withdrawals from two unlisted wholesale funds holding more than A$9 billion after a valuation dispute with auditor KPMG.

Net tangible asset values across three of its ASX-listed funds were cut by about 5% combined. The Real Estate Multi-Strategy Fund fell more than 12%.

The regulator's posture

ASIC chair Sarah Court has called the Bathla collapse "the first real test for private credit." Late last year, ASIC put the sector on notice after a review found potentially damaging practices across the fast-growing industry.

The Angas action shows ASIC now using its stop-order powers against a lender it says was not clear with investors. Whether Angas's transcription-error explanation satisfies the regulator remains to be seen. ASIC has not said whether it will revoke the orders early or let them run the full 21 days.