Metrics Credit Partners has launched a governance review following its dispute with auditor KPMG over asset valuations, adding to scrutiny of Australia’s rapidly expanding private credit industry.
The review follows delayed financial accounts and the temporary suspension of several ASX-listed Metrics funds after differences emerged between preliminary and audited valuations.
Metrics subsequently reduced the net tangible asset values of three listed investment vehicles by a combined around A$170 million.
Chief executive Andrew Lockhart has acknowledged investor disappointment and said an independent review will consider governance arrangements and whether remediation may be appropriate once valuations are finalised.
Regulators watching private credit
The episode comes at a sensitive time for the sector.
Australian investors have poured billions of dollars into private credit strategies in search of income returns above those available from conventional bonds and bank deposits.
Unlike publicly traded bonds, however, private loans do not have continuously observable market prices, making valuations dependent on assumptions about borrower quality, collateral and the likelihood loans will be repaid.
Those risks become more important when interest rates rise and property values fall.
Both ASIC and APRA are paying greater attention to private credit as exposure grows across investment funds, superannuation and property development.
Metrics remains one of Australia’s largest private credit managers, making the dispute particularly important for the sector.
The issue is therefore broader than one fund manager.
As private credit becomes a larger part of Australia’s financial system, investors and regulators are increasingly asking whether valuation practices, liquidity arrangements and governance have kept pace with the extraordinary growth of the asset class.
