Press Release – Foresight Analytics & Ratings Upgrades Remara Private Credit Fund’s Investment Rating to ‘SUPERIOR’.

Sydney, 15th April 2024 

Foresight Analytics & Ratings has recently completed a ratings assessment of the Remara Private Credit (RPC) Fund. The Analyst Rating for the strategy has been upgraded to SUPERIOR from VERY STRONG ratings issued in 2023.

A SUPERIOR rating indicates the highest level of confidence that the Fund can deliver a risk-adjusted return in line with its investment objectives, given the current growth of SME and real estate lending in Australia. The investment manager’s support for this strategy is experienced and well-resourced and importantly reflects a more scalable and diversified approach to private credit portfolio construction.

Designation as a COMPLEX product predominantly relates to the multiplicity of warehouse structures and, in turn, the multiplicity of lending verticals. This complexity provides various risk-return attractions for investors. The vertical integration of the origination process adds an additional level of complexity but also serves to mitigate margin compression risk for investors over the foreseeable future. 

The Remara Private Credit Fund is an open-ended, unlisted fund that invests in a diversified pool of loans to consumers and small-to-medium businesses (SMEs) in Australia. It is managed by Remara Investment Management Pty. Ltd. (the Manager), which is part of the Remara Group.

The Fund seeks to provide stable monthly income with a high degree of capital preservation. The Fund is targeting a return of 4% p.a. over the 30-day bank bill swap rate (30-day BBSW), currently equating to a target return of 8.35% per annum (net of management fees). We note that over the last 12 months and since inception, the Manager has materially exceeded this target, importantly without taking excess risks.

The Fund provides exposure to the SME and real estate finance sectors. Unique in its sector, the Remara Goup pursues a vertical integration model with respect to the loan origination parties. Remara has ownership stakes in four originators, Dynamoney Ltd. (SME lending), Soda Capital Pty Ltd (floorplan finance), Marble Money Pty Ltd (consumer credit) and Remara Credit Pty. Ltd. (real estate finance). Remara’s aligned and proprietary origination network is a competitive advantage that facilitates a higher quality loan selection and regular supply of credit opportunities to effectively recycle short to medium dated credit.

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About Foresight Analytics’ Investment Due Diligence Rating (IDD Rating) 

The objective of Foresight Analytics’ Investment Due Diligence Rating (IDD Rating) is to identify the best funds and opportunities for future investment. We assess the fund’s historical risk-adjusted performance compared to its peers to form a holistic view of the manager’s ability to deliver future returns. The IDD rating indicates the quality of the investment option within the context of a diversified portfolio and full investment cycle.  

 Foresight’s analysts use a 5-point scale to determine how the fund will perform against a range of risk factors.   

  • SUPERIOR indicates the highest level of confidence that the fund can deliver a risk-adjusted return in line with its investment objectives and that it is highly suitable for inclusion on APLs.
  • VERY STRONG indicates a very strong conviction that the fund can deliver a risk-adjusted return in line with its investment objectives and that it is suitable for inclusion on most APLs.
  • STRONG indicates a strong likelihood that the fund can deliver a risk-adjusted return in line with its investment objectives and that it is suitable for inclusion on most APLs.
  • COMPETENT indicates the fund may deliver a risk-adjusted return in line with its relevant benchmark and that it may be suitable for APLs.
  • WEAK indicates the fund is unlikely to deliver a risk-adjusted return in line with its investment objective and that it is not suitable for most APLs.

A ‘Hold’ designation is applied to a fund’s rating if a material change impacts the fund manager, and we need to review the rating.  A ‘Sell’ designation indicates the Foresight Investment Ratings Committee considers risk factors to be elevated enough that maintaining an investment in the fund as part of their diversified portfolio is questionable.

Foresight Analytics Foresight Complexity Indicator  

A Foresight Complexity Indicator (FCI) highlights the complexity of an investment product based on a range of indicators. These typically include its terms and conditions, performance-based fees, liquidity structure, financial leverage, use of derivatives, rare and niche asset class/opportunity set, currency exposure and the level of transparency offered for investors. Foresight believes these factors can disproportionately affect riskadjusted return outcomes for investors even if a manager is very skilled. Investors can use FCI as a guide to portfolio position sizing within a diversified portfolio context. 

Picture-1 Press Release | Foresight Analytics & Ratings Upgrades Remara Private Credit Fund’s Investment Rating to ‘SUPERIOR’.

 

Media Contact – Foresight Analytics

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Email: jay@foresight-analytics.com

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About Foresight Analytics 

Foresight Analytics, an independent Sydney- based firm, provides investment ratings, data analytics, assurance and advisory solutions to leading investment management companies, superannuation funds and wealth groups across the Asia Pacific.

Foresight’s innovative, evidence-based approach blends both human and forensic insights into the analyses of economies, markets, themes, investments products and portfolios. Foresight Analytics was founded in 2015 by Jay Kumar, a former executive of Morningstar, Optimix Investment Management, ANZ Wealth & Private Bank and the Reserve Bank of Fiji.

Foresight Analytics & Ratings platform provides investment and operational due diligence ratings on both public and private market strategies. Foresight has built its diligence niche in complex alternative assets, including domestic and international private credit investments.

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