Sistema founder Brendan Lindsay backs private credit fund

Sistema founder Brendan Lindsay.

Sistema founder Brendan Lindsay has backed a private credit fund aimed at filling a gap in the lending market.

The Peninsula Credit Fund, formed by a group of experienced New Zealand lenders and supported by capital from local business owners and investors, said it would provide capital to businesses through direct private credit loans.

The fund is aimed at lending to companies with well-established and proven business models, primarily those operating in the agriculture, corporate and commercial sectors, with loan sizes in the range of $5-15 million.

Andrew Pryde, director at Peninsula Credit and previous head of corporate finance at ANZ Bank, said the ability for Kiwi businesses to access credit had become increasingly difficult as local banks moved from a relationship banking model to an automated “scorecard” type of approach.

“This ‘scorecard’ approach prevents local banks from investing the time required to understand and address their customers’ needs,” he said.

“Where credit is sought by business owners and those credit requests fall outside conservative scorecard measures, then credit is denied, which has major repercussions for businesses,” Pryde said.

Mark Hiddleston, formerly managing director of commercial and agri at ANZ Bank, is also a director.

Private credit is a non-bank lending product where a loan is not issued on a public exchange and transactions are negotiated directly between the borrower and lender.

Pryde said New Zealanders were increasingly turning to private credit to provide flexibility in their funding sources.

He said the private credit market was well-established in New Zealand for property development finance.

“But with banks tightening lending criteria because of regulatory requirements, cost pressures and the time and cost associated with credit requests that fall outside the box, there is growing demand and need for private credit loans for local businesses,” he said.

The fund aimed to generate quarterly cash-paying returns for investors through a diversified portfolio of direct loans to established and proven New Zealand businesses.

Peninsula Credit has an initial fund size target of $60m with a targeted final close of $150m of committed capital.

Pryde said investors get a targeted strong risk-adjusted annual return of 9.2 per cent on their investment, comprising a margin of 3.5 per cent over the published New Zealand bank bill rate (BKBM), which is closely linked to the Reserve Bank’s official cash rate.

Nati Growth Limited, the economic and wealth generation arm of Te Runanganui o Ngati Porou, is also an investor.

Sistema, which makes plastic kitchen containers, was sold to an American company, Newell Brands, for $660m in 2016.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.