One of Australia's largest money managers sees increased opportunities in direct lending as companies affected by the COVID-19 crisis seek access to capital.
IFM Investors, with A$156 billion ($102 billion) in funds under management, says the economic recovery from the pandemic will take years and expects struggling firms, from child care centers to property developers and retail and commercial property landlords to need financing.
"You still have businesses that have very good long-term fundamentals, but they need some support during this interim period and that's what we are looking at," said Hiran Wanigasekera, an executive director of debt investments at the Melbourne-based firm. "We are looking at how do we come in and plug the funding gap that they need."
Australia has avoided the scale of sickness and death that's ravaged countries including the U.K. and U.S., but its lockdown measures threaten to plunge the economy into its first recession in almost 30 years. The nation's banks have granted almost A$60 billion in loan deferrals to small and midsize businesses, but the government has warned such a level of support is finite.
Mr. Wanigasekera expects there to be refinancing needs as businesses draw down liquidity lines from banks, exhausting short-term funding methods.
While many companies have rushed to shore up their balance sheets through stock offerings, IFM says some firms may prefer to have access to debt or hybrid capital that is less costly.
"We are open to looking at those sorts of opportunities," Mr. Wanigasekera said in a phone interview Thursday.
IFM, which is owned by 27 of Australia's largest non-profit pension funds, continues to see private credit opportunities in Asia. But it has temporarily put on hold plans to expand its investment team in the region due to travel restrictions imposed due to the outbreak, he said.