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[Exclusive] Alceon raises Korean capital for debt strategies in Australia

Oct. 14, 2021 - 16:10 By Son Ji-hyoung
A general view of people enjoying a picnic at the Museum of Contemporary Art Lawn, in Sydney, New South Wales, Australia, Sept. 25. (EPA-Yonhap)
Sydney-based investment manager Alceon has raised a combined 55 billion won ($46.3 million) of capital from a South Korean institutional investor for its nonbank loan strategies designed to finance Australian real estate development projects.

Alceon‘s senior debt vehicle, named Alceon Australian Real Estate Corporate Senior Loan Fund, received capital from Korean allocator ABL Life Insurance from last year until September, bringing its fund under management to A$383 million ($283 million) as of September. ABL Life is a Korean arm of China’s Dajia Insurance Group.

The Australian fund manager is in talks with undisclosed Korean investors to raise an additional A$50 million to the open-ended debt fund by November, an investment banking source told The Korea Herald on the condition of anonymity.

The latest deal demonstrates Korean institutional investors’ appetite for assets generating a moderate income, amid property developer financing displacement across Australia as commercial banks started retreating from the lending business due to toughened regulatory constraints.

Australia’s soaring housing prices have become a headache. Its financial authorities have begun expressing concerns about a home loan growth that appears to be faster than household income growth against the backdrop of the record-low interest rate in the country. Housing prices in eight major cities rose 16.8 percent in the past year through June, according to data released by the Australian Bureau of Statistics in September.

This suggests a “higher anticipation for the growth of nonbank lending business in Australia,” supported by the nation‘s robust debt enforcement environment, the source said.

The nonbank debt fund is aimed at providing the residential construction assets of mid-sized developers in Australia with senior secured loans with a loan-to-value ratio of between 40 percent and 60 percent. Such loans will go to development projects in cities in eastern Australia, such as Sydney, Melbourne and Canberra.

In return, Alceon‘s debt vehicle seeks up to 10 percent in targeted return annually, without executing leveraged loan strategies to boost income and bear extra risks.

Founded in 2010, Alceon has invested in alternative assets, ranging from real estate to private equity and nonbank corporate credit mainly in Australia. Its signature debt strategy for real estate developers was launched in 2018.