- MA Financial Group to acquire 100% of Blue Elephant Capital Management (“BECM”)
- Transaction provides MA Financial a scalable entry into the US credit market. Initial focus will be on the estimated US$5 trillion US specialty finance market
- Coinciding with the purchase, MA Financial will launch the MA Global Private Credit Fund offering Australian investors access to specialist, proprietary lending opportunities in the world’s largest credit market
- MA Financial and BECM have been successfully working together through a loan funding partnership over the past two years, after being introduced by MA Financial shareholder Moelis & Company in 2021
MA Financial Group an ASX-listed manager of alternative assets with over $8 billion AUM, has announced that it has acquired US based credit asset management firm Blue Elephant Capital Management (“BECM”).
This move will enable MA Financial to expand its fast-growing credit investment platform into the US, while offering its Australian and international clients access to differentiated specialty finance investments globally.
Overview of Blue Elephant Capital Management
BECM is a New York based credit asset manager established in 2013. It manages US$184 million (c.A$275 million1 ) of private credit investments across a range of specialty finance verticals, including direct loans, asset backed lending and receivables financing.
BECM is led by an experienced management team with a strong track record. It has deployed US$500 million in US specialty finance since inception, while its core fund has outperformed high-yield credit benchmarks by 2.3x2 since inception.
The team is well known to MA Financial after being introduced by senior management at Moelis & Company in early 2021. Since then, BECM and MA Financial have worked together to evaluate and co-invest in US specialty credit through a loan funding partnership.
Strategic entry into global credit markets
The acquisition of BECM provides MA Financial with a platform for growth in global credit markets, focused on the approximately US$5 trillion of addressable opportunities in the US alternative and specialty credit segment.
MA Financial Joint-CEO Chris Wyke said, “The BECM platform represents a strategically valuable launching pad for MA Financial to build significant scale in the world’s largest and deepest credit market.”
Mr Wyke added, “There is substantial cultural alignment and shared investment philosophies between the MA Financial and BECM credit investing teams, which has been validated over the past two years co-investing together.”
Specialty finance has been a highly successful investment strategy within MA Financial’s credit fund suite, which now exceeds $2.5 billion AUM. This vertical is focused on differentiated credit opportunities which are typically asset-backed, with robust structural protections, and have outstanding risk-adjusted return characteristics. MA Financial’s Credit AUM has grown at a CAGR of 62% since inception of the strategy in 2013, and now accounts for c.30% of total AUM compared to c.20% of total AUM in 2020.
The acquisition is consistent with MA Financial’s focus on markets where it has established expertise and a clear strategic advantage. This transaction brings together MA Financial’s proven credit investing and capital raising capabilities with an on-the-ground team that has a long track record in sourcing, curating and managing alpha-generating credit assets. In due course, MA Financial will also seek to establish expanded fund distribution capabilities in the US.
BECM’s founders J.P. Marra and Ashees Jain will assume the roles of Co-Head of MA Financial US Credit Investments, while senior BECM executive Kent MacWilliams will become Head of MA Financial US Specialty Finance, collectively leading MA Financial’s efforts in credit investing in the United States.
J.P. Marra said of the acquisition, “We are very excited to be joining the MA Financial team and are committed to a long-term growth journey with the business. Having successfully invested together for some time, we are confident that the combined capabilities and complementary styles of our respective teams will enable us to capitalise on the favourable thematics for credit investing in the US. These tailwinds are only improved as a result of recent market developments.”
Chris Wyke also highlighted, “We like to start in partnership and empower great people to build businesses in large addressable markets where we have a genuine edge. We have a deep investor base with strong demand for specialty credit and believe the combined MA Financial and BECM credit investing platform will provide investors with a distinctive offering for their portfolios.”
Bringing global specialty credit to Australian investors
Alongside the acquisition, MA Financial will launch the MA Global Private Credit Fund. The Fund will provide the firm’s domestic and international clients access to proprietary, specialty credit & lending opportunities in the US market.
The Fund will be managed by the combined MA Financial and BECM investment teams. It will focus on specialty finance, asset backed lending, corporate debt and capital solutions investments, leveraging the combined loan origination, underwriting and portfolio management capabilities of both platforms. We estimate that investments of this nature have the potential to offer attractive risk-adjusted returns of 8-10%.
Mr Wyke said regarding the Fund launch, “The MA Global Private Credit Fund will provide our Australian and offshore investor base with access to investment strategies focused on specialty, proprietary lending opportunities in the US credit markets.”
The MA Global Private Credit Fund is expected to launch in June 2023 and be available to domestic and international wholesale investors from 1 July 2023.
1. Based on USD:AUD exchange rate of 1.51 as at 1 May 2023.
2. Benchmarked to the US iShares iBoxx $ High Yield Corporate Bond ETF as at Dec-22.