SYDNEY, Sept 28 (Reuters) – One of Australia’s biggest private credit lenders suspended trading of three of its ASX-listed funds on Monday and said it would mark down their asset values after auditors disagreed with assumptions used in preliminary financial reports.
Metrics Credit Partners, which manages around A$40 billion ($28.09 billion), halted trading in its Metrics Real Estate Multi-Strategy Fund, Metrics Income Opportunities Trust and Metrics Master Income Trust before the market opened.
In separate filings with the ASX, it said auditor KPMG had made “different decisions” in relation to inputs and probability weightings from those used in preparing the preliminary financial report.
The changes resulted in the net tangible asset values being cut by 12.16% at Metrics Real Estate Multi-Strategy Fund, 10.08% at Metrics Income Opportunities Trust and 1.99% at Metrics Master Income Trust.
The announcement comes amid heightened scrutiny of the country’s booming private credit sector following the collapse of property developer Bathla, which owed A$3 billion to some 40 lenders when it entered administration. Metrics said it has no exposure to Bathla.
Australia’s corporate regulator warned last week of unrealistic valuations and poor governance practices in the industry, and said firms that failed to meet its standards should prepare for enforcement action.
Metrics said the 12.16% markdown for the Real Estate Multi-Strategy Fund, to A$2.22 per unit from A$2.53, was mostly attributable to a reduction in the fair value of unlisted commercial real estate equity investments. The fund last traded at A$1.68.
“In finalising the audited results, greater weight was given to downside scenarios and less favourable potential outcomes,” Metrics said in a filing.
The audit process also resulted in higher provisions for potential losses on loan exposures across the three listed funds.
That reflected circumstances such as “interest-rate and macro-economic conditions and heightened regulatory expectations as applied to specific assets and the portfolio”, Metrics said.
($1 = 1.4239 Australian dollars)
(Reporting by Christine Chen in Sydney; Editing by Kevin Buckland)
