Murdoch Gatti (00:02.637)
Andrew McVeigh, welcome to the rate of change with your cough management.

Andrew McVeigh (00:06.693)
Thanks Murdoch, thanks for having me.

Murdoch Gatti (00:09.457)
Good to have you on Andrew. Why don't we start things off and tell us a little bit about yourself and how you're going to finance. I think I saw on your bio, mate, you're the board of the Crenella Sharks.

Andrew McVeigh (00:21.249)
I was, I was on the board. So how I got into finance, it's actually an interesting story. Like I was accounted by trade. So I did all of my early schooling, uni work, got my CPA, CA, did all of that. And essentially kind of got a little bit bored of the traditional accounting trade. Worked my way up through finance. I was very lucky. I kind of...

came into a role at Brookfield Asset Management just after they acquired Multiplex, and that was in 2008. And that really kind of opened my eyes to broader finance outside of the traditional accounting background and work. And then from there, I've really just flourished in terms of complexity, structuring. The work that I did at Brookfield was sensational. was a...

Very, very strong company. was very fast moving. We used to say kind of a year there was like four years pretty much anywhere else. The amount of different transactions we did and exposure that I got across multiple things. And that really created a very, very strong foundation in terms of understanding finance, understanding investment, understanding certain asset classes. And real estate is kind of a critical one of that.

And then I finished my time there in 2017, I think it was. And at that point I finished as CFO for their property business, private equity, and I was also on corporate operations. So kind of within the region, I looked after and established offices in Singapore, Japan, South Korea, Shanghai, and set up a lot of the infrastructure for what is their kind of fun platform kind of in and around the region now.

A lot of my experience has just really been go where things become interesting and complicated. And the reason for that is my natural tendency is I like to be entertained. I hate coming to work and it's being a stable day. I like complexity, I like challenging the status quo. And you'll probably see from a couple of funds, we like to...

Andrew McVeigh (02:38.397)
Create things that are different to market and kind of really challenge the conceptual view of things. So, yeah, my at Brookford was excellent for that. gave me a great foundation. And then that led into starting Romara. And as you pointed out, member of the Sharks board. that was, I got involved in that 2013, I think. And then I finished there 2017.

Got involved really, they had a big property development, so I was involved in that through that period. I worked a bit in and around the finance, trying to transition and work through how a NRL club kind of establishes itself in terms of a position of financial surety. And then essentially that gave me a good background, joined the board. They won the premiership, which was great. I'd like to say I had a big impact on that, but I...

I really didn't. And yeah, finished that in 2017, I think, pretty much just as I was kicking off tomorrow.

Murdoch Gatti (03:44.593)
You went out with a bang, so what took it out in 2016, right?

Andrew McVeigh (03:47.213)
Yeah, 2016, finished in 2017. Like it's the only ways down from there.

Murdoch Gatti (03:53.297)
You know what, leave it high.

Andrew McVeigh (03:57.185)
Yeah, exactly right. George Costanza style, alright?

Murdoch Gatti (04:01.099)
So is being associated with the Premier League, sorry, with the league essentially like owning horses is one of these things how like you spend a whole lot of time, a whole lot of money, you're so happy you did it, but then essentially you saw your horsey done with it, or you're going back into the world of rugby league.

Andrew McVeigh (04:16.204)
Well, we are going back into the World Rugby League. So we have signed on as sternum sponsor for the St. George Dragons, which is a, there's a bit of controversy to that given the rivalry between the two clubs. But I think, you know, getting involved in rugby league was, was something of a passion of mine. I played the sport as I was growing up. So I kind of knew it. I supported it. I watched it. And yeah, when you look at the NRL, it's, it's, it's really interesting. So

Yeah, if you, the amount of media coverage and exposure that that business or that team or that group of people have versus the amount of revenue and balance sheet and I suppose finance capability behind it, there is a substantial difference between that and what you'd see in a multinational or ASICs listed business. So the amount of media scrutiny is substantial. And what that means is you just get

you get pulled into different directions. There's some things get blown out of proportion, but everybody's focused on kind of outside looking in. And what we've kind of found is the best clubs are the ones that are focused on the inside looking out. And we were successful there for a long period of time and really were able to set the club up on good financial governance, good internal governance, good structuring in terms of.

you supporting the football team and so forth. So it gives you, and what I really got from it was it was very entertaining as you'd expect, but you kind of saw how a very different structure or a very different type of business worked that had a very different type of asset base. And that was an asset base of effectively eyeballs and intangibles. yeah, while the game is, is the centerpiece,

everything that goes in and around it is the viewership, the member interaction, the participation. So it's a very, very different type of business. And particularly given that at that point I was still at Brookfield. everything and all my experience at that point was a business in and around hard assets. So physical properties or companies that produce things and whatnot. It certainly gave a very, very, very different exposure and a very different input.

Andrew McVeigh (06:36.54)
It was, I wouldn't say it's as bad as a horse's, because it didn't cost me a lot of money, it probably cost me more time.

Murdoch Gatti (06:44.209)
You know, I find, look, we'll get to finance in a second. This is just interesting. So one conversation, so I love sport, big, you know, I up playing AFL, rugby union, rode a Joey's. So I've seen that side of it. But then when you go watch like the Olympics or you see, you know, when, the soccer is essentially made the world cup and I think it was in my 20s, it got absolutely hooked. And now, you know, good old, if I've been an Xbox generation, just obsessed with the premier league and fantasy premier.

Andrew McVeigh (06:54.494)
Yep.

Andrew McVeigh (07:08.261)
Yep.

Andrew McVeigh (07:11.913)
Yeah.

Murdoch Gatti (07:13.777)
The thing that just never sat well with me was, you know, a bench player that doesn't even play. That's 18 years old gets what half a million pound or half a million. Right. Just sitting on the bench. Meanwhile, our greatest athletes in Australia, half a million dollars is your practically like number 10. You know, it makes no sense. And look, I've had this conversation. So my cousin, my cousin's husband, my Karina, he just bought the Perth Wildcats within the past. So that.

Andrew McVeigh (07:21.928)
Yeah.

Andrew McVeigh (07:29.867)
One of the better played, yeah. Better played, yeah.

Murdoch Gatti (07:43.697)
that's just gone down. And then one of my clients used to be a member of the Perth Wildcats a number of years ago, in the COVID times. And they were discussing the finances were so screwed that he, since they were well off, were actually supporting a lot of the players on the team to essentially put food in the table, cover mortgages, because it was just so bad and broken. What I'm going with is, I'm just trying to understand...

Andrew McVeigh (07:47.178)
Thank you.

Mm.

Andrew McVeigh (07:59.319)
Yep.

Murdoch Gatti (08:10.045)
the finances in Australia, is this a political thing? Is it a broadcast rights thing? what, is it the AFL gets a crap ton of funding and everyone wins? Meanwhile, you know, someone our greatest athletes, like I think that never sat well with me was in my union as well. It was fantastic. The George Gregan era, you know what I mean? Like it was phenomenal. Phenomenal. The blows were incredible. then, you know,

Andrew McVeigh (08:10.858)
It's population size.

Andrew McVeigh (08:23.08)
Mm-hmm.

Andrew McVeigh (08:27.978)
Thank

Yes. Yeah.

Yep.

Murdoch Gatti (08:38.009)
It just all changed. And then a lot of the great athletes like Matt Gitto, they all had to go play in France and other places just to put food on the table and look after their family. But then essentially the Australian Roaming Commission, you know, blacklisted them for playing for Australia and essentially demonized them for going internationally, right? Until they just kept moving back to back and they had to bring Gitto back as like a white off rule. I'm just, I'm just

Andrew McVeigh (08:45.978)
Yeah.

Andrew McVeigh (08:57.224)
Yes. Yes.

Murdoch Gatti (09:04.101)
quite astounded with Australian politics when it comes to sport and then they believe as an owner financially looking after their players and also the other thing as well that there's no you know knockout there's no relegation right so you know there's no incentive for not coming last because if you come last then essentially you get into the pool to pick up the best young talent I'm just anyway it blows my mind Australian sport but since you're essentially in the thick of it I thought I would ask what's

Andrew McVeigh (09:17.149)
Yeah.

Andrew McVeigh (09:21.514)
Well, I think you bring up some really good points and I think the biggest challenge that I see with Australian sport is it's not professionally owned. So, yeah, if you look at the NBA, NFL, EPL, they're all, all those clubs are owned by an individual or a group of individuals. So they're doing it for profit, which means they make alternate decisions as to

how to structure things and there's less politics kind of involved in that that whole process. Whereas if you look at sport in Australia, it doesn't have that level of professionalism in terms of investment because there's just not the return profile coming off of because our economy is too small, our population is too small and it just doesn't generate that much revenue to be able to have the private equity or the individual people own these clubs.

And what ultimately happens there is you're relying upon a club, a membership base to vote in people and then you start to get the politics of who's running it, who's been there the most amount of time, how do they get voted, how do you get voted in, how do you get voted off? And you kind of get to a position where it's just like, it is just politics. And it doesn't mean you always get the best people. It's kind of like the Australian political system. You might not always end up with the best people in it.

but what you're going to do is end up with some good politicians.

Murdoch Gatti (10:53.233)
Yeah, that makes a lot of sense. Well, I suppose that's applicable to, you know, finance and lending space, right? You know, essentially the banks owned it, you know, it's like Australian sport. then initially when they went and go, you know, well, we don't want the risk. It's a privatization of the sports side, right? Or working on whatever it is.

Andrew McVeigh (11:00.219)
Yep. Yep.

Andrew McVeigh (11:06.191)
Yeah. Yes.

Murdoch Gatti (11:12.305)
you know, we're gonna go out and do something else. Kind of like, you know, with Australia, the A league right now, it's not really working out that well. So now they're going and bring, the discusses bringing a second tier relegation, which think is fantastic. I don't know how that's gonna work. But I suppose, you know, we find out right now, you know, it's very similar. A number of guests that we've had on are in your space. I want to get, why don't we get into that now? So like, Romara's seen this opportunity, you know, in the private lending space. Who is Romara?

Andrew McVeigh (11:24.316)
Haha.

Murdoch Gatti (11:41.681)
How does it work? How's the structure? I know you love a good structure. I your structure is fantastic, by the way. I really quite enjoy it. Like, how does it work? What are you learning against? And what's the philosophy of Ramara?

Andrew McVeigh (11:44.667)
Yeah.

Andrew McVeigh (11:53.989)
Yeah, so I think if we start high level philosophy of the business is we want to be able to generate institutional grade assets and allow everybody access to those. And I think a lot of that business overarching philosophy came through, you know, from my time at Brookfield, like I saw a lot of great investments, a lot of very specific closed style of investments that I wasn't even able to invest into as a senior member of the team.

So what we're essentially looking to try and do is create a business that originates good, strong institutional grade assets across credit and across real estate. We've got this thing called tactical opportunities, which is essentially just a fancy word of saying, private equity like investments in and around credit and real estate, which are the two kind of sub-sectors that we know really well. But essentially what we're looking to do is create a business that generates good, strong quality assets, institutional grade.

and it opens that up to everybody. Each of the businesses and each of those asset classes we have approached slightly differently. So if we look at credit, credit is our largest vertical at the moment. We run around about 1.7 billion in that vertical. And the way that we've structured that is we've been very, very specific about attacking the credit market at the lender level and then creating solutions for the investor level. And the reason why we've done that is

The structure we've got, as you mentioned, it is a well-structured business. We've got a series of portfolio companies that essentially originate our underlying credit for us. The reason why we've established those is it gives us a greater line of sight on the procurement of assets, the quality of those assets, which is very, very important. Credit as an asset class is one that is skewed more to the downside. So...

your return profile is limited to what's written in the contract. So that might be, okay, I'm lending out at 10%, all I can earn is 10 % of my money, but I can lose every dollar that I've lent. So you're skewed towards the downside. So asset quality is very, very important. So for us, that vertical integration and having those portfolio companies means we get a greater level of oversight on the quality of the credit, the origination of that credit. We get to sit on.

Andrew McVeigh (14:16.122)
the the management committees, the credit committees, we get to set the credit policies, we get to kind of have our say in that. And probably once you've originated the credit, the second component is how you service that credit. So by having such a well structured business, we get a lot of transparency right down to that contract level. So we get arrears reports and performance reports on a weekly basis across all of the books that we kind of run and invest into.

And that gives us a lot of granularity. That granularity works really well because we can respond to macro and micro changes probably faster than most other managers have the capacity to be able to do. A really good example of that was through the COVID period. So, yeah, we do a lot of bank statement underwrite in Dynamoney, which is our SME lending business. So we're doing trucks, trailers, yellow goods, that type of stuff. So business critical asset finance for

small to medium sized businesses. And these businesses are generally 10 million and below in terms of kind of annual turnover or revenue. So we really like businesses on the SME side where you've got the directors who still work in the business. They're not working on the business, they're working in the business. And they're the technical expert for that business. So it might be a group of plumbers where he has four five guys working for him, but he's still on the tools. He's still working, he's still going out quoting, he's still embedded in that business.

The reason why we like that and the reason why we structured around that is it gives a greater sense of ownership once you've been, and you'll probably know this Murdoch, once you've been in your own business and you've started to do some of your own things, that taste of freedom is very difficult to give up. So we see those smaller businesses, and particularly where you've got the directors who are the technical experts.

they're more incentivized to keep the business afloat and keep the business going through times of stress or challenge. So what we like around that is it gives us the ability to be able to partner with those businesses, provide them with business critical assets, and they essentially then have the ability to kind of run that through the ground and ensure we meet, well, they meet all of the obligations of contract. But the integrated nature of that means that through COVID, we were writing credit to people who were

Andrew McVeigh (16:36.752)
doing bank statement underwrites, we were able to back out who got JobKeeper. As we're doing it now, we're able to back out who's got or view who has payment plans with the ATO, how are the performance on a monthly basis in terms of cash in, cash out for their business. And it means that we can make more granular decisions. During COVID, we were writing credit, but we were backing out the JobKeeper. We could see who could still perform without that JobKeeper payment if it was being taken away.

So that gave us a level of oversight and granularity that wasn't really available to a lot of other managers and a lot of other investment funds. They might need to go find an originator, create a relationship, wait for them to originate, go through that whole underwrite program for the pool tape, then wait for them to structure it up in terms of a bank warehouse, and then maybe take a bit of a slice. Whereas for us, we get money through our funds.

or a series of funds and then we've got the ability to talk to the origination businesses and go, okay, let's reduce the yields or the rate to the borrower by 30 basis points and we almost double our flow. So money comes into the platform and out of the platform through credit that we've approved. We don't change credit standards, but we can manage the flow of credit and the flow of assets based on point of sale changes in terms of yields and things like that. Or,

More importantly, we can actually go, we don't like retail discretionary at the moment because of the current macro environment. So we're just gonna penalize that with an extra one, one and a half percent on any loan that we provide to a retail-based business. And as a result of that, they go somewhere else. So again, we're not changing credit on a rapid basis. We're just changing the levers that you can pull through the platform to be able to go, okay, I want more of this or I want more of this.

Murdoch Gatti (18:23.409)
Yeah, no, that makes a lot of sense. Let's just paint the picture. we're not looking exactly at a chart or at the report. I encourage anyone in these funds to go download the SQM report on the website. Let's just paint the picture about the flow, about how it works. So you've got the parent, so essentially the holding company, right? And then the holding company owns, I should actually, I managed to ask you how it works. You've got the holding company, the trading entities with the funds, right?

Andrew McVeigh (18:26.22)
Hmm.

Yep.

Andrew McVeigh (18:39.812)
Yep.

Andrew McVeigh (18:43.479)
Yep.

Andrew McVeigh (18:51.65)
Yep.

Murdoch Gatti (18:52.909)
interesting is underneath the trading entities, the trading entities, you have a series of, you know, vertically integrated lenders, which you mentioned, Dynamoney, like, how many in there, the other interesting thing about this as well, lot of the lenders which you speak to are predominantly only like hard asset, hard asset lenders. Also, some people might not be familiar with what a warehouse is, right? You know, like what's a warehouse facility?

Andrew McVeigh (19:02.712)
Yep.

Andrew McVeigh (19:11.652)
Yep.

Murdoch Gatti (19:19.633)
We understand that essentially the banks might only like taking the warehouse out. might essentially middleman it. might need 100 million, but these people are looking for a $5 million transaction. So how's that facilitated? I just keep painting the picture about how it all connects. And then what's interesting is you've got the different funds. Some funds are more conservative, targeting a smaller return, a lot more conservative, and then you've got the opportunity. You know what I mean? How does it all structure and work together to

Andrew McVeigh (19:29.828)
Mm-hmm.

Andrew McVeigh (19:34.914)
Yeah.

Andrew McVeigh (19:45.004)
Yes. Yep. So essentially what we've created is through the head asset management business, which is our Romaro business, we now have taken positions in a number of origination businesses or portfolio businesses that we call them. And those are Dynamoney, which is SME lending. So they're doing smaller ticket, business critical, asset and equipment finance, business loans, insurance, premium finance.

Murdoch Gatti (19:50.321)
You're welcome.

Andrew McVeigh (20:14.071)
We then have a business called Romara Credit, which is our own platform that does real estate lending. know, traditional land finance, construction finance, residual stock finance, that type of activity. And that goes pretty much anywhere from kind of five mil to 20 mil, maybe 25 mil now. We have a third business, is Soda Capital. Soda Capital does floor plan finance. So if you think of owning, say, a marine dealership,

you need to buy the boats, you need to sell the boats. Generally, you don't use your own cash to buy the boats. You'll use our facility. We'll buy the boats, you put some equity in or you put some capital in. We have ownership of the boat, you sell the boat, we get paid back, you go through that cycle again. So it's kind of working capital for dealerships and point of sale businesses. We've got then Marble Money, which is our consumer finance business, and that does mortgages kind of in and around the areas that the banks don't participate in.

So if we look at the Australian banking landscape, a lot of changes have happened over the course of 2023 that have been regulated for a period of time. if you take a step back to 2008, GFC occurred. Why did the GFC occur? There was a lot of people taking risk where there was no alignment of interest or no continued ownership in that risk.

you saw like everyone's seen the big short, that is actually fairly reflective of what was actually happening. So origination of credit was being done for poor credit standards, it was being packaged up, it was being sold to the market. The guys who did the origination, the packaging, didn't have any ownership of that. And as a result of that, they weren't incentivized on the overall long-term performance of those assets and that credit pool. So what we've seen now is US,

Australia, UK, Japan, most global economies have established minimum skin in the game risk retention. So if you want to create structured securities warehouse programs, and I'll kind of explain what that is in a moment, but if you want to create that, you need to have a skin in the game mandate. So you need to have a risk retention piece at the bottom of that to ensure you're aligned with everybody that you're selling your debt obligations to and your notes to, that you don't create moral hazards. So IE, you're not.

Andrew McVeigh (22:39.702)
originating whole bunch of stuff to people's dogs and then packaging up and selling it people. And it also improves the overall quality of assets that get generated into market and improves kind of, or doesn't import systemic risk across the overall economy. So banks, as a result of that, have had certain types of lending that they do now more heavily regulated from a risk-weighted capital. So when a bank writes a loan,

they might need to only put $2 down for a $100 loan. So on a salary and wage mortgage, the bank's tier one equity capital charge is two bucks out of 100. So their return profile works out to be 13, 14, 15 % return on equity as a result of that capital structure. Now from 2023, 1st of January, there was a big shift in terms of those risk weightings.

So where in scenarios they used to only put $2 in certain asset classes, they now have to put $15, $20, $25 of capital for that loan, which means their return on equity's gone down and they've gone more into warehousing programs. So what a warehouse program is, is essentially we originate all the credit, so let's say 5,000 car loans, we'll sell all of those car loans into an SPV. From that SPV, we issue a series of

of debt notes and obligations, the bank will buy those at the absolute senior level. So it might provide the first $70 of capital, it might get a 6 % return on that, but it suffers its losses absolutely last. So they get AAA recording and against that position, they can put the same $2 that they used to put. So their return on equity kind of goes back up to where it used to be. So very, very technical, but essentially there's been a number of structural changes that have led to

Now, what is a more prevalent outcome or a better return on equity outcome for banks to go into warehousing, into securitization facilities and providing those to non-banks. So, Marble competes in those areas where the banks have had, well actually all of our businesses compete in those areas where the banks have had punitive capital charges applied to them. And that's a permanent shift. We're not going back to where we used to be.

Andrew McVeigh (25:00.192)
those are permanent tailwinds and that's a permanent change to the industry. So you'll start to see a lot more prevalence in terms of non-bank lenders, in terms of writing certain types of credit. Doesn't mean it's risky credit, doesn't mean it's more risky, doesn't mean the banks don't wanna do it. The banks still want exposure to it. They're still providing warehouses. But the problem is from a return on equity, it's more economical for them to have three guys put half a billion dollars out.

don't worry about the individual borrower KYC and they can still put their 2 % of capital down against that. That's a better outcome for a bank than originating all those loans directly, having all the teams do the KYC programs and to manage those loans from a servicing and to originate all of those loans. So it's a bit of a shifting landscape in terms of how the banks make money, what their return on equity needs to be and how they respond to those regulatory changes.

The second component of that which hasn't hit yet, which is gonna be interesting to see how it plays out, is the change to the hybrids. So that being phased out from 2027, that's a very, very economical funding mechanism the banks have at the moment. So with APRA starting to change the regulations on that, we're gonna start to see, again, cost of capital for the banks to go up, and they're probably gonna be less...

Yeah, there's probably gonna be a less desire, a lower desire for them to go directly into certain markets and write certain types of credit. Not because again, they think that credit is risky, but because they just don't get the return on equity they need to be able to provide for their share price and their earnings profiles.

Murdoch Gatti (26:42.799)
Yeah, don't know what to go off to get into further. I was going to hold on to questions in the warehouse and they just mentioned the hybrid. We said a guest on recently who covers that space quite well and he brought it up. He reckons it's a terrible idea, they're removing the hybrid because cheap capital for that market. Obviously, they're the hybrid space. But if they remove the hybrids, doesn't that make accessing essentially debt markets for the bank more expensive and becomes a harder job?

Andrew McVeigh (26:56.396)
Heh.

Andrew McVeigh (27:11.298)
It will certainly make it more expensive, but you need to really kind of understand and take a step back and say, what's APRA looking to try and do? They're trying to establish the banks to a position where they don't create systemic risk across the entire Australian economy. So for their purpose, they're not worried as much around the return on equity. They're more worried about, how do I have them invest into or provide loans that

lower risk where there's lower chance of creating substantial defaults and that bubbling through the equity. And then you get a scenario like the Credit Suisse scenario where everybody who had those hybrid style notes who thought they had a debt instrument actually have an equity instrument and actually got zero. And the big challenge that you've got there is those notes have been purchased by retail investors. They generally don't understand the challenges around that.

Murdoch Gatti (28:02.277)
Yeah.

Sorry to jump in, but they don't understand. Like when I was at a broken house, they used to sell essentially hybrid notes like all the time. And they essentially pitch them. Like they wouldn't call it a bond, they were essentially highly conservative income bearing asset. And I'm looking at this thing and I was like mid 20s just going, this is mad. Like it's not a dead instrument. It's essentially an equity. It's going to behave like an equity. If the market falls and collapses,

Andrew McVeigh (28:18.124)
Hahaha

Andrew McVeigh (28:25.782)
Yeah.

Yeah. Yeah.

Andrew McVeigh (28:34.454)
Yep.

Murdoch Gatti (28:34.769)
it's going to have equity style volatilities. What happens is a lot of retirees have this particular asset class. And I'm starting to wonder, looking at it now in hindsight, is it essentially the reason why they bought so much of it? Was it a problem where the wealth management, like high-end wealth management, what we're doing now, where the industry is going, really wasn't as developed or as easy to access? You didn't have a mate that was connected to Morgan Stanley.

Andrew McVeigh (28:49.566)
Thank

Andrew McVeigh (28:54.71)
Yeah.

Andrew McVeigh (29:03.279)
Yeah, look I think it's, there's multiple layers in that I think. If you look at why hybrids are successful and why they're desired, it's because they do have liquidity and there is liquidity there. So how strong that liquidity and how good that liquidity is in times of stress needs to probably be tested a little bit, but in theory you can sell it and it's a liquid asset.

Murdoch Gatti (29:04.655)
window access problem

Murdoch Gatti (29:10.769)
Yeah.

Andrew McVeigh (29:30.726)
given the structure, it's got a coupon attached to it, everyone goes, it's it's dead, it's dead. You're right, there's an embedded equity component there that I don't think people purchasing it, particularly retail investors, probably understand that well. But I think it's generally a lack of product. we look at, and a lot of what we've done here, we've built the business with bank warehousing, institutional funding first. So the first five or six years of this business has been, you know,

a couple of big four banks, a couple of super funds, a couple of global banks, a couple of investment banks, and we have built a platform that is institutional quality proven out by some of the biggest debt investors in Australia and in global names as well. Then what we have done is built our retail, private wealth, if fund platform after that. The reason why we've gone that way is

We now have the ability, because we've got the asset generation, or because we've got the funding profiles, the warehouse programs, we now have the ability and we have dedicated our fund structures to really address the needs of end investors. Most asset managers, and where we are really different is most asset managers, they're credit guys. So they bought credit, or they've invested in credit, and they wanna do what they wanna do, which is, I wanna go buy credit, I'm not really worried about, you know,

servicing a specific need for investor, I'm just gonna go buy a bunch of credit and you're gonna buy it because you need some kind of yield or something like that. Whereas what we've actually said is, we go across the capital stack, so we've got a couple of funds now, and what we've really looked at is tranching up that capital stack, as you pointed out earlier, to create product sets that work for people if they're in the accumulation stage. So you can go to our higher risk credit products, which is...

know, our credit opportunities fund or the income fund, which is kind of a medium risk profile for the income and a high risk profile for the credit opportunities. You can earn double digit credit returns, you can be well protected, well structured, but they're higher risk profiles and they're more, I suppose, appropriate for people that are looking for that accumulation. So looking to create that foundation. You know, if there is a change there where, you know, they don't earn 16%, they earn two or 3%.

Andrew McVeigh (31:44.338)
they've got a period where they can make that up again. So just basic portfolio management and life cycle management for somebody across their investment life cycle. But then what we've done is created a series of funds that work for people in that preservation stage and that retirement stage. And they're hiring those capital stacks. So they're kind of sitting in and around the areas that the banks sit, which is kind of investment grade style, investment grade rating. And what we like about that is,

They've got different liquidity profiles because as you pointed out, you want in retirement, you want a consistency of income, but most importantly, you want your money when you need it because you don't really know what's gonna happen. You might have a medical issue, you might wanna go traveling, your family might have a problem, whatever that might be, but you need the ability to have certainty around accessing your money and creating liquidity. There aren't a lot of strong products out in the market if you take the hybrids out.

that actually can provide a lot of that. So what we've really focused on from our platform is, we've got at the super senior level of the capital stack, we've got our cash management fund, and that has two components attached to it. So essentially it's got an at call, which is 48 hours notice, it needs to invest into AA or better security assets, so kind of rated assets, or it's got a term option, which is kind of similar to how Latrobe look at that market.

where it's a six month or a 12 month. We've got our investment grade fund which opens in about a week's time and that's everything in that fund is investment grade rated assets. Monthly liquidity, kind of roughly about a 9 % style return and then you get into the private credit income fund which is around about the 13 marks so it's a mixture of investment grade and non-investment grade and then you get into the credit opportunities which is about 16 % and that's all non-investment grade or kind of high yield credit.

What we really look to do is go, because we have the asset generation underneath, because we have the line of sight on the asset, and because we use securitization and warehousing, we can tranche assets up to provide different return, risk, and liquidity profiles, and then we can create funds and structures that meet investor needs, because we already have the institutional guys, so they have very different needs, but the private wealth, the retail, and the wholesale guys,

Andrew McVeigh (34:05.819)
they have very specific needs that are for them as individuals. So that flexibility in the structure and the structure as an overall has been very purposely built to say, okay, these assets are exceptional assets. If you look at most bonds, if you look at most fixed income that's sold globally, it's the asset classes that we create. It's those ABS securities, RMBS securities, they're just packaged up and provided on market to create liquidity.

What we're looking to try and do is create the profile return of a private market with the liquidity profile and access the liquidity of the public market. But you don't need to go into the public market where you have severe volatility in terms of needing to exit, times are stressed, everybody's exiting at certain points and then suddenly you get, you've got your 5 % coupon, but then you have a 20 % capital loss when you tried to exit because you've had to exit and the market hasn't had enough liquidity.

Murdoch Gatti (35:05.585)
Yeah, no, this space is improving and growing quite quickly. We discussed the returns. Let's just get into the format products on the lending space. My main interest as an example is the private credit income file. And I'll explain why. If anyone else has a property or purchased eggs recently and you look back at the numbers in the past 20 years of what true inflation is, I would argue, please check your numbers.

true inflation is probably property inflation, which means it's roughly anyway, probably about seven, even eight percent, right? Compounding over a 20 year period, right? that accurate?

Andrew McVeigh (35:35.444)
Yeah.

Andrew McVeigh (35:39.537)
Yep. Yep. Yep. Yeah. Yeah, you're probably right there,

Murdoch Gatti (35:45.297)
Okay, so then based on how I look at this is essentially if we're making 8 % and yes, the market and property is starting to slow down a bit just a touch, but hypothetically, properties are making 8 % over that period. If you only make an 8 % in your money, then essentially you're standing still. There's another way of looking at it. So if you get, this is not advice of course, but if you're getting say 4.5 % or 5 % in a bank, well, you're losing money to a relation.

Andrew McVeigh (35:51.547)
it.

Andrew McVeigh (35:59.229)
Yes, yes, yes.

Andrew McVeigh (36:11.235)
Yeah, think that's fairly fair, particularly looking at the the Historics. Whether that continues for the next few years or not, no one has a crystal ball. But yeah, definitely looking at the past, if you're getting 5%, you're probably standing still or losing.

Murdoch Gatti (36:14.949)
Get that fair rap so then.

Murdoch Gatti (36:29.553)
Yeah. And so when I first started this industry, everyone was like, you know, start essentially, you get taught based on the product which you're discussing, right? At the beginning was equities, and you switched it to the farm. And what's interesting, the older you get, you start to actually look at things in reverse, instead of like trying to make money, it's more essentially in reverse. So theoretically, why I find the private income fund interesting.

Andrew McVeigh (36:45.947)
Yeah. Yeah.

Murdoch Gatti (36:52.913)
is even when you're dealing with an advisor and an advisor will charge fees, of course, that comes off the office top. So essentially, you're trying to essentially make a margin between that 8 % the fee of the advisor and then then inside there is technically your profit margin, right? Whilst you're essentially trying to protect the capital. Now, a lot of families have businesses and the businesses are generating income and they're looking for something more fancy, but hypothetically, if you're in a position where...

Andrew McVeigh (37:03.487)
Yep. Yep. Yep.

Murdoch Gatti (37:17.905)
you've had a large mid-fall, saw the business go down in the air, since you've got five, $10 million, you don't lose that capital, but you don't want to go back with the mother. And what I'm understanding is you're creating these, and a lot of people in the space are essentially creating equity-like returns that are performing, if not better than true equity and property integration. And you have the capacity to pick up an extra margin. And depending how it's structured, can either take that

Andrew McVeigh (37:36.165)
Equity. Yep. Yeah, Chris, yeah.

Murdoch Gatti (37:44.817)
your main money and then go offensive in equity decreases people's brains like you know, the risk department or essentially to use it or then you can take the income and do what the hell you like with it. But my thinking is that essentially and then how you staggered it as well, right? But, you know, that's essentially my understanding of this space. Have I missed anything or is it?

Andrew McVeigh (37:58.048)
Thank

Andrew McVeigh (38:06.203)
No, look, I think that's pretty reflective. Credit gives a lot of benefits. So what we like about securitized credit and real estate credit, but particularly securitized credit, is it's consistent contractual cash flows. So every single month people make payments. In that process, you've got the payments are collected, the cash goes through a waterfall, everybody's paid off. So there is a lot of consistency in that cash.

and that cash flow profile is all contracted. So that means that there's a lot of income that comes through that process. And what we like about securitization is exactly as you said, you're gonna get to pick where you wanna sit from a risk perspective. So if you wanna earn slightly higher, you wanna get above that 8%, you actually wanna make money on a net basis post inflation, then you can take that risk. The volatility in our unit price and the volatility in credit is actually quite...

So I think our sharp ratio for our unit, our return profile is 0.15. Like our unit price on the private credit fund has not deviated from a dollar. Yeah, arrears kind of get charged off on a monthly basis. We have all of that arrears reporting that goes through there. But we structured those funds and what we really like about credit is as a bedrock to your portfolio, you get...

a good strong yielding asset class that has consistency in return and distribution month in month out every single month. So that means that you can make different decisions around where you put your more aggressive capital as you kind of pointed out. when you're opening your portfolio, the worst thing you could do is have a big portfolio of equities and you're up 10%, down 10 % because suddenly you're then making decisions based on emotive responses and emotive outcomes.

What credit does and what a big component of credit does to your portfolio is it takes away some of that emotional capital or emotional baggage around what decisions you ultimately make. your ability to be able to open your portfolio and go, okay, I've earned X of cash. I don't need to then pick stocks that are gonna give me dividends because I don't need the cash. I've got it from my credit profile or I've got it from my credit portfolio. And you rightly pointed out like,

Andrew McVeigh (40:22.361)
We look at, and everyone says to us, your private credit income fund is earning 12, 13%. How does that work? And yo.

Murdoch Gatti (40:30.961)
That's a good question. And especially like on the risk and why I started with the structures, essentially everything pulls in. what does that mean? Does that mean like you got everything from the most offensive and more risk and then the least? Do these funds just have a percentage or higher or lower percentage or what is considered higher growth, higher risk and more conservative? Is that essentially how they're balanced or how do they

Andrew McVeigh (40:32.728)
Yep.

Andrew McVeigh (40:38.54)
Yep.

Andrew McVeigh (40:55.96)
Yeah, it's a good way to equate it. So basically, if you look at a capital structure, you've got low risk at the top, you've kind of got medium risk in the middle, and you've got higher risk towards the end. So we've tranched our funds up. So if you're sitting in that private credit income fund, you're kind of in that medium profile. So you've got some of the lower risk stuff.

some of the high risk stuff, we blend it out to get a blended return. So you get some of that upside from the high risk stuff, but you get a very, very big chunk of the lower risk portfolio and that creates a good blended return. One of the key things is, % of our book is exposed to float and that's actually really, really important. So, a couple of years ago when RBA was at zero, you'd see a lot of first mortgage and mortgage based funds would be paying eight, nine percent.

Now the RBA is at four, but they're still paying eight, nine percent. All we've done is at the same time, rates were zero, we were paying nine, they were paying nine, but rates have gone up four percent, we just passed that four percent on. That's the only difference. So I think a lot of people need to, and one of the key things to understand when you're investing in credit is where do you sit from a risk perspective? What should be the appropriate return that you're getting for that risk? And...

If a manager has been providing 8 % return through the cycle, regardless of what the RBA rate is, then that's probably a question of, who's getting the extra cream when the RBA rate's lower, or who's getting the extra cream when the RBA rate's higher? Because that isn't essentially being passed on. You're not moving with the so-called inflationary times where you've either got, you're ahead of inflation or behind inflation.

So I think there needs to be a lot of consideration given to is it floating rate risk, is it fixed rate risk, what's the risk profile for where you're sitting in that capital stack. And what we like to do is we have components of real estate and components of structured credit in our portfolios. We do that because real estate has very, very good security, but no project ever finishes on time. So your ability to have a good consistent

Andrew McVeigh (43:10.708)
measurement of cash month in month out to make your distributions and provide the liquidity to investors is considerably harder with a pool of just construction or just real estate type loans. Whereas you mix that with securitized credit where it's all contractual, it's principal and interest every single month, you blend out the best of each of those portfolios where you can provide some illiquidity premium and some outsized return on the credit, but you're adversely impacted by the lack of liquidity or

the time delays on projects, et cetera, et cetera. And then on securitized credit, you can create portfolios where you're looking at certain risk profiles, certain exposure profiles. You can have some lower rating stuff in terms of yield. It has very good strong characteristics, but you get great cash flow, great consistency in cash flow for distributions, liquidity requirements, and windows for underlying investors. What we've really tried to do is create

a platform and a series of funds that we do all of that hard work for you in terms of what should the allocations be on an underlying credit asset class. And probably most importantly, we actually backed that up by investing our own money in those risk retention notes. So as I said before, like, you know, post GFC, there was a big structural change in terms of making sure that anyone who created these warehouse structures and, and sold.

instruments that banks invested into needed to have that risk retention and that skin in the game. Across our platform, we invest into the risk retention note of every single loan and we've got 21, almost 21 and a half thousand loans now. So that means that our capital as a manager is on risk before investors capital is through our credit structure and that is very, very unique.

So that creates a lot of alignment of interest. Trust me, absolutely hones our focus on ensuring that we're originating the right type of credit and that we're not importing issues into the book that are either gonna affect us or affect our investors.

Murdoch Gatti (45:17.957)
Yeah, it's very interesting. The topic of risk was come to us. And this is really people need to think about. I always see risk based on what's the asset which you're lending against, right? Do you like theory here this way? Do you have a first mortgage on it or is it second mortgage on it? Where are you in an extension of the queue? So. But before I go down that path, one thing I was just thinking on the warehouse side.

Andrew McVeigh (45:28.875)
Yep.

Andrew McVeigh (45:33.695)
Yep. Yep. Yep.

Murdoch Gatti (45:45.649)
A lot of people might be sitting here. A lot of people are probably just starting to hear about warehouses slowly, probably third or fourth time. But a lot of people might be familiar with Clitoride, the CDOs, like Clitoride debt obligations, essentially the thing that blew up the states. We should discuss this because what's different now compared to then, because if anyone's gone and watched the big short and doesn't understand finance, maybe what they're hearing is essentially bundling up a lot of loans.

Andrew McVeigh (45:50.453)
Mm-hmm.

Andrew McVeigh (46:07.21)
Yeah.

Yes.

Murdoch Gatti (46:13.617)
into a particular warehouse vehicle and then selling that to an A-listed bank or one of the lower ones down the tier. But these loans don't just get sold to banks. They also get sold to, I don't know, a police pension scheme or something of the equivalent. Right? get lighted up and sold to institutions and that's where the capital comes. So the biggest question becomes, as they pointed out in the big short, a lot of people actually don't read what's in these

Andrew McVeigh (46:28.854)
Yeah, yeah, exactly.

Murdoch Gatti (46:43.803)
the underlines like if there's thousands of loans across essentially cars and tractors and no one actually goes through the list and actually goes to this thing in the rear or whatever. Everything's fine when it's hunky-dory but the question becomes that what is the risk or is that being mitigated because you're owning the companies that essentially are going in and you're not trying to get these from outsources like that.

Andrew McVeigh (46:45.162)
Yeah. Yeah. Yeah.

Andrew McVeigh (46:59.946)
Yep.

Andrew McVeigh (47:07.988)
Yeah, this is by far the absolute key point in understanding credit and securitized credit in particular. look, you're 100 % right. I think, as I said before, the risk retention requirement means what used to happen where you could create all these pools of bundled loans and sell them off and no one really looked at the documents or understood the risk, that period has passed. The risk retention requirements means

you lose your money as the originator if you're doing that. For us, as the asset manager through our portfolio companies, we've got our own skin in the game and our own risk retention, so we lose our money first. But there's probably two aspects I'd say. The Australian securitization industry is very, very well advanced. I think it's close to 80 billion or 90 billion of annual issuance through that. And it is very much a bank sponsored or bank funded market.

So that means you've got the big four banks, you've got global banks, you've got investment banks that are providing these facilities and investing into these facilities. And trust me, they read the docs, they set up the docs, they look at the pool tapes. So a lot of work is being done in terms of understanding, okay, statistically we want an outcome that looks like this on four standard deviations or five standard deviations of economic conditions. So everything that you do is modeled through

seasonality, pool parameters, performance over a long period of time. It's flexed for kind of GFC credit conditions, recession style credit conditions, and essentially you then get a big pool with all the statistical outcomes and tranching levels and whatnot. And then every single month that pool is checked, that pool is reviewed by every investor in that pool. So that might be a couple of big four banks, it might be a few of the...

pension funds, might be other asset managers, and it's obviously us as well. So there are a lot of eyes, like I think the Australian securitization market is slightly different. CLOs are slightly different. They're generally bigger style loans to kind of corporate middle market. ABS is, so asset-backed securities or mortgage-backed securities are generally smaller, overall levels.

Andrew McVeigh (49:24.82)
But there's a lot of oversight that goes into these structures and a lot of oversight that goes into understanding what's in there, what the performance of those assets are, and how do we structure those facilities to ensure no one gets hit at each of those tranching levels. I think the key thing to note, and particularly I think there's 300-odd credit funds in Australia at the moment that you can pick from. That's a very large number. And a number of these guys talk about warehouses.

I think the biggest question to ask is, is the warehouse a bank sponsored warehouse or is it a private sponsored warehouse? And those two things are very, very critical and quite different. So if you've got a bank sponsored warehouse, the bank is sitting there, they're investing into the AAA or the more senior pieces. So they've got all their origination team reviewing it. They've got their institutional guys, they've got their credit guys, they've got their credit committee reviewing it.

They've got major law firms crafting the documents and writing all the documents for them. We've got this exact same thing on our side and our portfolio company side. And then you have all the other investors that go directly into those structures that are also doing the exact same thing. So there's very little ability to change, hide or manipulate anything through those structures. On private warehousing, if you've got an asset manager who is providing just a private warehouse and they are the only financier of that warehouse,

there's not as much scrutiny in and around that. Generally the risk retention piece might not be as large. And the biggest challenge that I see at the moment with credit is there's a tremendous amount of inflow of capital into credit funds, but the quality of assets are not there for everybody. So that means what you'll find is a number of funds are sitting on high cash balances, so kind of 25, 30%. And that should be bit of a red flag.

As a manager, if you're sitting on a high cash balance for a period of time, I'm not talking a month or two months, I'm talking three, four, five, six months, then you've got a deployment problem. If you've got a deployment problem, you're gonna have people exit your fund because your return profiles are not there. So you are more incentivized to go up the risk curve, put money into a more risky structure, whether it's a direct loan or you write your own warehouse facility with a new originator who doesn't have any track record.

Andrew McVeigh (51:47.198)
doesn't have enough capital, doesn't have a well established business. And your concept is, I get the money out the door, I get a higher price, I go up the risk curve, but that's okay, because I make up for the period where I sat in cash for six months and I didn't have anything to buy. So those are the challenges that you really need to look for when you speak to other asset managers. Are they buying bank warehouse programs? Are they buying public market term outs? Or are they buying kind of private transactions where you have other...

large-scale institutional investors purchasing those, or are they providing their own warehouse structures to small businesses or small lenders and there isn't that oversight in terms of other participants in those structures. And that means you can be importing risk into your portfolio that you might not be appropriately compensated for, essentially.

Murdoch Gatti (52:42.993)
No, you're right. My mates at also in lending space, they're saying that the competition for warehouse large like really good stuff happens just to accelerate it. It was easy before, it's just an actual love for the cause. It's kind of like when I was in foreign currency, I came in at the wrong time. came in essentially, know, went to the high effects and what obviously that was for X. The brokerage could be charged 0.1. Like 20 years ago when it was privatized, you know, when it was there, I think I was charging previously, I just came in at the wrong time.

Andrew McVeigh (52:52.999)
Yeah.

Andrew McVeigh (52:58.858)
You

Andrew McVeigh (53:08.486)
you could.

Well, 20 years ago you could front run the book too.

Murdoch Gatti (53:12.571)
Right?

Yeah, it is definitely climbing in these things like one door opens, one door closes. But the topic where I'm going with this is your point regarding cash track, right? So this is the biggest question is cash track. And I've had this conversation with every single mate and my farm, etc. I think performance is driven based on how the person managing your affairs is remunerated. Right?

Andrew McVeigh (53:41.469)
Yep. Yep.

Murdoch Gatti (53:44.027)
So what I like about this space is a lot of fund managers like you said, was my only charge just essentially the fee based on the money, have, you might not get a performance fee. And if you're trying to do a conservative product, shouldn't probably have a performance fee, you know, but with an opportunities fund, yes, you should have a performance because it's an opportunities fund. It's just how you essentially structure it. But then essentially the other thing we see all the time we see in equity is like some equities and small caps can only take 400 million, right?

Andrew McVeigh (54:04.746)
Yes.

Andrew McVeigh (54:12.711)
Yeah, Yeah.

Murdoch Gatti (54:13.777)
they get greedy. a $100 million. That's a $1,000,000,000. It's you know, it's just but cash. I cash drag is something that people should be aware of. And the competition is heating up.

Andrew McVeigh (54:20.061)
Yeah.

Andrew McVeigh (54:26.419)
Yeah. Well, I think even if you look at it from a mathematical sense, like if you're sitting on 30 % cash and you're getting, you know, 5%, let's say it's 5 % for that. And you know, all of the rest of your investment portfolio is earning 10%. Yeah, that's actually, you know, two, 300 basis points to get lost in that cash drag. And if you look at our income fund, you take 300 points off that, we're at 10 % return. So,

Murdoch Gatti (54:49.413)
Huge.

Andrew McVeigh (54:55.503)
The integrated nature of having those portfolio businesses where we've got 3,000 brokers across those platforms that essentially bring deals to us, we've got the ability to go, we've got a large chunk of money into our funds or through our platform. We will essentially be able to go, okay, let's reduce the yield on a truck. a truck might be, we might put it out the door at 10 and a half.

let's say we now put out the door at 10%, that doesn't impact the investors. The investors still get their returns based on where they sit in the risk profile, their returns are spread across the RBA, so if we change the rate, that doesn't impact us. What it impacts is us economically in terms of our profit that we get from excess income and things like that through our portfolio companies, but the money's out the door. And what that means is the money's out the door, we haven't changed credit profile, we've changed the pricing mechanism.

But on a holistic basis, on an integrated, that pricing change is very, very minor for us and has no material impact. So it gives us greater level of control to be able to respond to large liquidity inflows. And it also does the exact same thing in the opposite scenario. So where we've got large redemptions or we have a redemption request.

we set kind of 45 day windows for those across most of those funds, particularly the Private Credit Income Fund and the Credit Opportunities Fund. And what that gives us is it gives us the ability to do the opposite. So let's say we were at 10%, we go to 10 and a half percent for that truck yield, we don't get as much volume, we get a whole bunch of principal collected, and then we don't put as much new loans out the door. And at the moment we write 125 to 150 mil of loans per month.

and we have roughly about 30 to 40 mil of principal collected per month. So if we don't write as many new loans and we collect more principal, cash goes back up through the structure and we can create those pockets of liquidity kind of as people need. That power is only really available if you have that vertical integration and you have those portfolio companies because you can make decisions at those levels that impact the overall liquidity through that entire structure. If you don't have those links, you you've deployed

Andrew McVeigh (57:13.124)
you don't have the ability to call up your originator and go, hey, can you increase your pricing and give me more principal back? They're gonna, yeah, that's not gonna be a well received phone

Murdoch Gatti (57:23.121)
No, and you're right. Yeah, there's a lot of lenders out there that are very good, but they do directly. It's just all different. It's just how it's structured. I can see what you're doing. So here's your question then, if your fallout is essentially, you know, it's vertically integrated, right? But if you're not vertically integrated, should a lender consider, you know, having a theoretical cap on how much money that should be running? Like say, someone in Australia small caps, because based on the changing, there's no one's discussing this and I'm just

Andrew McVeigh (57:47.0)
Yeah, yeah, there's three. Yeah.

Murdoch Gatti (57:52.081)
I'm wondering if lenders should consider capping their funds.

Andrew McVeigh (57:56.72)
There's two things or two ways to kind look at this. Credit is hard because generally if you're outside of an opportunities fund, your fee base should be fairly small because it is credit and it's generally a much smaller management fee. But that means you've got a minimum amount you need to have to have a team with the right capability to be able to do that. you kind of, a little bit between the rock and the hard place there. I think one of the things that we're starting to see

Murdoch Gatti (58:06.321)
Yeah.

Andrew McVeigh (58:24.132)
We haven't got that because we don't need it yet, but we hear and we speak to a lot of other managers who are putting these NAV facilities in place. So this is where the fund is taking leverage in the fund and that leverage in the fund gives them the capability to either take a little bit or less in terms of investors, but then lever up the fund and that gives them the capacity to kind of borrowing in the fund, yeah. So what that...

Murdoch Gatti (58:46.961)
Borrowing in the fund from the bank. So essentially, operating like a bank. If you borrow inside and everything goes to the pot, you're essentially... Yeah, that's the problem.

Andrew McVeigh (58:53.304)
Yeah, correct, exactly.

Andrew McVeigh (58:58.692)
The bank takes the money, yeah. You kind of become an equity investor in a credit business then, which is very different to being an investor in a credit fund.

Murdoch Gatti (59:08.881)
Like if you're a wholesale investor or an institution and you're utilizing funding to sell to someone or others, that's what you capital out. You would want 100 % of the capital essentially in-house. If you're borrowing from the bank and things go sideways, doesn't that increase the risk profile of these funds?

Andrew McVeigh (59:15.94)
Mm-hmm.

Andrew McVeigh (59:26.704)
100 % it does, 100 % it does, yeah. So I think one of the key things is understanding what leverage can be in a fund and then what leverage is actually used in a fund. So in our private credit income fund, there is no leverage in that. We have a mandate, there cannot be any leverage, and we also have a mandate that there needs to be 5 % of credit protection that sits behind any position that we essentially have. So there's always kind of a couple of different protection mechanisms that sit there.

Our credit opportunities fund, that can have leverage. We don't have any in there because the return profiles don't need that leverage. Where we've looked at that leverage is if we do have periods of liquidity because they're different types of loans, it'd be more opportunistic. We could take up to 20 % leverage to be able to create liquidity profiles for people. We haven't had to do that. We're not planning on doing that. And they're not the type of loans where you just go to a bank and they'll go, okay, here's 50 % leverage on those.

So it's a very different profile. But the prevalence now of NAV loans starting to come to credit managers means that they can have a fund of 400 mil, they can get another 200 mil or 300 mil from the bank, and then they can kind of write a little bit more credit, those returns, but people aren't really understanding what the risk profile is. And again, you're probably going substantially up the risk curve for that type of stuff.

without actually understanding what's embedded in the fund, what are the terms of that borrowing. Are you taking money from an investment bank that as soon as something goes bad, they're gonna step in, take all the assets, sell all the assets to recover their value and you're kind of left with nothing.

Murdoch Gatti (01:01:08.145)
Yeah. Yeah. Everyone out there. Remember, please read the offering documents, the product discussions, information management and chat to your advisor. No, because this is important. And I suppose the topic which we're discussing now is when an industry begins. It begins for a reason. There's an opportunity craving someone else doesn't want to do it. And then it's off to the races. It's fantastic. But then regulation comes in and then essentially becomes tied and more competitive.

Andrew McVeigh (01:01:08.912)
Good.

Please read the offering documents, yes.

Andrew McVeigh (01:01:37.189)
Yes.

Murdoch Gatti (01:01:37.627)
and the people that aren't established or like in the top half, they will potentially need to take more risks in order to keep up with the industry. And that's how the cycle goes for every single industry, So be careful out there everyone. We're there yet, but if this continues this path, in a couple of years we might start seeing this pop up.

Andrew McVeigh (01:01:43.728)
Yeah, yeah, yeah.

Andrew McVeigh (01:01:59.988)
I think, yeah, look, it's interesting. think we're definitely like, we get the question a lot. Do you think there's gonna be some, you know, train crashes through the next couple of years for credit managers? There's definitely gonna be. And that is because of the, you know, the challenges that you've got, as we kind of pointed out, the quality of assets aren't there. The proliferation of credit, of capital coming into this market is substantial.

and your ability as a manager, particularly a small manager, to try to compete with some of the bigger guys that are raising and also have longer term relationships with underlying originators who produce assets, it's gonna be a challenge. So what I'd probably say to anybody through this timeframe is look at the business model, have an understanding about how they performed, but probably have an understanding of what type of credit are they buying and really have a good understanding of what their risk profile is.

I think the challenge that we see is there needs to be more regulation in terms of credit. And what I'd say about that is I think the disclosure requirements are okay, but what we've looked to really do and what we're starting to implement now across all of our funds is a consistent unit, a consistent risk measurement unit. So because we do a lot within the Securitized Finance space,

We use Moody's, S &P and Fitch in terms of rating each of the tranches of notes and warehouses and so forth. So they've got standard units of risk measurement that are global, they're universal, right? Everybody understands what a triple B minus is, it's investment grade credit. And you go through that cycle through triple A all the way down to kind of see absolute dog shit, don't touch it. So what you kind of have in Australia is you don't have a lot of funds that...

bifurcate themselves in those types of standard units of risk measurement. What we're starting to do now is, and what we have built on our platform is, you have funds that go AA or better, know, triple B minus investment grade or better, a mixture which is kind of, you know, triple B to kind of B, single B, and then credit opportunities, which is kind of everything that's B and below type stuff.

Andrew McVeigh (01:04:15.189)
So we're trying to embed into our structure and hopefully it gets picked up a little bit more or it gets requested by advisors and investors a standard unit of risk measurement that we can sit there and go, okay, we've applied the Moody's or the Fitch or the S &P methodology. This is how we've done it. They've either done it as a private rating, public rating, or we've done it as a shadow rating. But we can sit here and say, it looks like this, it performs like this, and the credit quality of that pool works like that.

And that means that hopefully it becomes more easier to universally compare certain funds and certain managers.

Murdoch Gatti (01:04:53.169)
I get that and I can definitely see the benefit of making something easy and uniform. It's like consensus data. It's easy. It's uniform. But consensus data, go do your homework. Check. There's actually a truck there when they say they're going to be building a port. But the other thing which have my brains works is patterns. You guys are more intelligent in this space. This is why I these conversations. But the pattern, which I think we should discuss is macroeconomics because when loans and everything go to pot, it's

Andrew McVeigh (01:04:59.617)
Yes.

Yes.

Andrew McVeigh (01:05:06.707)
Hahaha, yeah.

Andrew McVeigh (01:05:19.341)
Mm-hmm.

Murdoch Gatti (01:05:22.641)
predominantly because, you know, the country slows down COVID, or you get a property collapse, or you have something that mass scale, because as you said, you're lending to a whole bunch of small, small businesses, right, which is fantastic, because they're the lifeblood. think I heard Trump and some other podcast guys discussing apparently, 54 % of small companies dominate the states. That's essentially where all the employees come from. if that's all about the market gets hit, and vice versa.

Andrew McVeigh (01:05:26.337)
Yep.

Andrew McVeigh (01:05:34.925)
Yep.

Andrew McVeigh (01:05:46.721)
Yeah. Yeah. Yep.

Yep.

Murdoch Gatti (01:05:51.985)
So my question is on a macro front, I'm doing a gloom, I'm just quite curious. There is a general regime shift happening in the world right now, which is globalist to a nationalist populist standpoint. It's better to be discussing this way than using adjectives like, as soon as I say the word, people just go. But I don't want to go, but she says it's an right? It's not about what can be renewed, look at the policy, understand how it impacts you.

Andrew McVeigh (01:06:01.441)
Yes.

Andrew McVeigh (01:06:06.145)
Yep.

Andrew McVeigh (01:06:10.279)
Yeah.

Murdoch Gatti (01:06:20.465)
And then we have our elections coming up in March, which may have another raging shift. So what I'm wondering is from the clients and everyone you're speaking with and borrowing and lending on the property side, so the business side, are people happy about these raging shifts? they concerned? Is it going to have, because they're talking tariffs and you know, mean, is this any material impact and what's the, and then the other thing I'm trying to phrase it into, well, so there's a global component, but there's also a domestic component.

Andrew McVeigh (01:06:35.479)
Thank

Andrew McVeigh (01:06:40.654)
Yeah.

Murdoch Gatti (01:06:50.129)
We've had a very big boom in property. The RDA promised everyone there'd be no interest rate hike. then everyone got blown up, all these poor people having more distress. And no one's talking about it. There's a lot of people out there that are doing it quite hard and the sales are going up now. You're starting to see the slowdown. You're starting to see lot of off-markets, auction not happening anymore. I'm just wondering, the lenders say it first, right? So I'm just wondering, what are you seeing back

Andrew McVeigh (01:06:51.854)
Yeah.

Andrew McVeigh (01:07:00.725)
Yeah.

Andrew McVeigh (01:07:16.517)
We do, yeah. Well, it's interesting. So to your point, we underwrite 6,000 contracts a quarter. So we have a very, very good view of the underlying economy from everything from SMEs to real estate developers, floor plan finance, so guys selling equipment. And there is a definitive slowdown, like without a shadow of a doubt.

Murdoch Gatti (01:07:18.705)
What are you seeing based on the various shifts?

Murdoch Gatti (01:07:41.841)
That's all there is. Good luck.

Andrew McVeigh (01:07:42.335)
What we've started to see is, and we've now seen this for kind of three quarters in a row, good prime borrowers, and Australia is predominantly a prime market, so good credit quality borrowers, they're starting to rationalize their need and want for credit. So that is a good sign because they're kind of going, okay, I'm not gonna just increase my credit capability and take on more obligations that I can't afford, so they're starting to rationalize. So once you start to get a slowdown of credit working its way through,

you will get a very substantial slowdown, but the lead time of that can be quite substantial. So we're seeing it now on the absolute front line, but the data that you kind of see through coming through the ABS and whatnot and the RBA, it certainly doesn't paint that same picture yet. We haven't seen any mass changes to the credit performance, which is good, but we're also a prime focus borrower and a secured lender. So...

we will generally see that kind of at the very end in terms of the portfolio. We started to see a little bit in subprime markets, which we don't operate in and kind of near prime markets, which again, we don't operate in. But I think the hidden message here or the hidden piece of the puzzle is if you look at COVID, Australia as a country got through COVID because the ATO supported all the small businesses and it supported them through no-baz payments.

no tax returns, no payments. So all that cash that was collected was kind of kept in the businesses and kept most of those businesses afloat. And now you see a lot of businesses that are going on payment plans to kind of pay all that money back. And that's also led to a lot of the liquidations that you kind of see and hear about now because the ATO have gone very, very hard to get that money back and everyone's gone, actually, you know what, I'll just.

stop this business and start a business over here and the ATO can just lose out. So I think what we're starting to see and what we've seen now for a while is the interest rates have bitten and they've certainly bitten at the retail or the individual borrow level. The ATO going at small business and businesses in general has created a compound effect on that. So they're sucking liquidity out of the market faster than the interest rate increases and the stable period we've had now for

Andrew McVeigh (01:10:03.563)
12 months or so of these higher rates. So I think what we're starting to see is there is less liquidity in the industry or in the market, particularly at the smaller end of the market in terms of SMEs. We don't see that changing the credit quality because people are starting to rationalise their credit and they're not taking as many obligations on, which means they're preparing themselves for that and for what will be potentially a challenging 24 months.

The issue that we see now is post US elections, pre US elections, we're like, we think the first RBA cuts gonna be your March period, maybe April, something like that. And that's gonna be really predicated on, we're gonna get some pretty poor data, I think, for Christmas. That's gonna filter its way through the system. There's potentially the first rate cut. But post US election and the changing nature of that.

Yeah, Trump without a doubt is pro-business and having people like Elon in there to cut out deregulation, we think that is inflationary.

Murdoch Gatti (01:11:14.193)
I can't believe he called it Dogecoin, but he's literally got his own Dogecoin acronym to populate the currency efficiency. It's so funny. It's just funny. You're gonna do a good job. It's hilarious. Sorry, I digress.

Andrew McVeigh (01:11:16.043)
But I I Feel like we live in a cartoon as a kid I could never ever picture this like this happening like someone like Trump winnings so I like Elon them being in the government like it's it's it's

Murdoch Gatti (01:11:41.073)
The funniest thing that Elon, right, is, know, with his SpaceX, the, right? Someone was interviewing him and he's like, so why is the, you know, why is it a pointy eye now? He's like, what's the movie The Dictator? I guess you say what now? He's like, no, no, what's the movie The Dictator? And he goes, wait, is there any, you know, engineering or does it improve efficiency to make it more pointy? He's like, no, no, no, it probably makes it, it makes it much worse. He said, why did you do it? He goes,

Andrew McVeigh (01:11:46.175)
Yes, yeah.

Andrew McVeigh (01:11:56.203)
Thank

Murdoch Gatti (01:12:09.269)
to his such a code in the detail he goes and he goes and even more pointy he goes why he won't have any bit pointy scarier I wanted more pointy is rocket pointy I feel the other than moving the dictator hilarious

Andrew McVeigh (01:12:11.611)
you

.

You

Andrew McVeigh (01:12:21.643)
Yeah, well, I think what you had you had you had Bezos who did that rocket that looked like something very specific. So maybe he didn't want to just round like that one. So I think I think that the challenge that we see now with the US is we don't really know exactly what's going to happen. Trump's a bit of a wild card in terms of how he operates and decisions he makes.

But we saw it the first time around. He's very pro-inflation and I think, or pro-policy that will lead to inflation. And I think the challenge that we see is how much of that feeds his way through to Australia. think a lot and I don't think a lot because of policy things that will impact Australia. I think it will be the proliferation of liquidity in the US that won't have as good opportunities that will then come into Australia. That liquidity in Australia will then chase more assets that

bid up the price of assets, bid up inflation, and then there will be something that will kind of pull all that liquidity out. So.

Murdoch Gatti (01:13:26.619)
You're coming in because from everything that I understand, Trump's a very big fan. I can't remember the president's name in the 70s. They call it the Tariff King. He essentially put a number of tariff. What's his blog's name? And there was practically no income tax. They're making money hand over fist. But my understanding of what he's really running on and looking to do is he's talking about bringing company tax rates down to 15%, which makes Australia like no unimaginable. What are we at?

Andrew McVeigh (01:13:36.135)
yeah.

Thank

Yeah, I can't remember who his name is.

Andrew McVeigh (01:13:51.675)
Yep. Yep.

Thank

Murdoch Gatti (01:13:55.939)
20s, 30s, makes it not investable, but only if you manufacture there, right? So I'm just wondering, to me, I'm hearing that there is essentially sell the Aussie by the US, you know, from maybe small, maybe larger, larger companies. So actually,

Andrew McVeigh (01:14:01.883)
Yeah.

Andrew McVeigh (01:14:10.085)
Yep. And that low Aussie dollar, I think you're right there, that low Aussie dollar is beneficial and kind of inflationary for us because people buy more stuff from us as a result of that. But I also think if you look at the creation of money and the creation of funds in the US, we'll need to go somewhere. And there's a lot. If you look at, say, credit assets as an example,

As a US firm, you can buy credit assets in Australia and not pay tax. Like you can get out of your country through 128F compliance as long as it's publicly issued on a larger scale. So you can buy Australian credit-based assets and not have withholding tax. So there's a lot of ways money can flow into Australia and there's a lot of ways that US money will flow into Australia that will kind of bypass all of Trump's issues and all the things that he's looking to do to kind of starve off China and

everybody else. So I actually think there will be a lot of liquidity. There's already a lot of liquidity. There will be more liquidity that will be created. And some of that will find its way into Australia. And as a result of that, you know, we kind of see potentially inflation or even stagflation kind of starting to rear its ugly head. What our view on that for real estate is, you know, I think we haven't seen we see more selling now, but we haven't seen a lot of selling.

the real estate market has been pretty resilient and that's because a lot of people are just trying to hold on, they're not looking to sell. So there hasn't been as much supply to kind of meet that demand. I still think there's a lot of cash and if you look at the people that have the cash within this country, there are a lot of people that are older that don't have the mortgage, that don't have the same stress, that interest rates don't have the same impact on. They will be the ones that will kind of step in and look to buy assets and look to buy real estate assets. So we think the price will still.

Yeah, it might deviate two to three percent either way. But we're not looking at a major change in real estate pricing of assets. I think the real challenge comes from if there is a wave of selling, we feel pretty confident there's a pool of liquidity there to buy all of those assets without substantial declines. It's once that is exhausted and there is a second stage of selling, that's when you might see adjustments to real estate prices coming down a little bit more.

Andrew McVeigh (01:16:31.249)
But that's going to be very much dependent upon where the RBA rate is at that point and what the overall confidence of the economy is.

Murdoch Gatti (01:16:40.593)
Very interesting observation. would you also discuss, say, business finance, right? The other thing is, well, behavioral psychology, think, well, overall behavior, how you're running businesses, I think it's changed, right? Unfortunately, teaching our kids how just to say, say, it doesn't work in this current environment, you need to work on it, right? It just doesn't, just seriously, like anything that's taught in universities, there's no question. Essentially, kids are better off at the age of 14, just going into the property developer or whatever it is, you've got a cousin, an uncle, an auntie.

Andrew McVeigh (01:16:56.355)
Yeah.

Andrew McVeigh (01:17:08.891)
Yeah.

Murdoch Gatti (01:17:10.065)
and just getting an apprenticeship and actually learning on the tools. you're going to get in. don't know what this university is teaching these days. I don't know what's going on. Where I was going with this was, how does it change? So everyone was very risk on, borrow your face off, leverage leverage leverage pre-COVID. And people saw the consequences of having no cash or having no means to actually

Andrew McVeigh (01:17:18.224)
It was.

Andrew McVeigh (01:17:30.811)
Yeah.

Murdoch Gatti (01:17:34.193)
you know, have a plan B or a plan C in order to deal with that. So I think a lot of people are nervous. And then you got Bill Gates coming out just going, you know, the first one was all right, but you know, there's the second one, everyone should be like, wait, what did you just say? Bill Gates, I'm going to go there. like, I think what's happening is a lot of people may be more frugal with business. Now they're taking their opportunities, but they're also being

Andrew McVeigh (01:17:47.428)
Yeah.

Andrew McVeigh (01:17:57.585)
Yeah.

Murdoch Gatti (01:17:59.473)
defense at the same point. that's what I'm hearing. You're seeing it a lot with markets. And then when essentially the regimes change, you've seen a massive run in equities in the States. And I kind of feel like there's a huge confidence coming back into markets. But hopefully that demand, I don't think behaviorally people may over leverage themselves because they kind of may fear something coming down the pike. And maybe that's what you're referring to as in

Andrew McVeigh (01:18:04.583)
Yeah.

Andrew McVeigh (01:18:14.281)
Yep.

Andrew McVeigh (01:18:21.639)
you

Murdoch Gatti (01:18:25.777)
There's a lot of people now that have made a bunch of money, maybe people are taking profit, and maybe you're deeper than them, they might look to buy the dip, but when that money becomes exhausted, the question becomes what happened there? Is that what you're getting at?

Andrew McVeigh (01:18:25.799)
Thank

Andrew McVeigh (01:18:34.567)
Yeah, look it kind of is like I think particularly at the business side there's less people looking to kind of increase their level of credit and obligation. I think people are generally kind of worried about you know, and I kind of look at Australia and the US as two very different markets. Yeah, if we look at the US from afar, yeah, that's a very different market. And the thing I like about, and I was told this

many years ago by one of my prior bosses at Bookfield and it rings true. The US is a boom and bust economy. If you look at the history of the US, it is up, down, up, down. They have big wild swings. If you look at Howard Marks theory of market cycles, it shows you that. That is the US economy, that's the US nature, that's the US character.

So they go through these cycles where you get that, what's that, the GameStop type thing. They go through periods like that. That is their culture, right? Australia is a very different culture and a very different, we behave very differently. So the challenge with the US is, if I was to say to you today, do you think the US is closer to boom or bust? What would your answer be? I'm pretty sure it's not boom.

Murdoch Gatti (01:19:52.753)
So no, right now it's my rise in is two years because essentially he's got the full run, he's got a full pathway. Like, if he went back to back, I think the answer was not the case, but essentially there's a huge undercurrent where people are pissed off. I've got young kids that are sick from essentially processed foods, pharma and all this type of shit.

Andrew McVeigh (01:19:54.863)
right now, but what's your horizon?

Murdoch Gatti (01:20:19.651)
a lot of really, really angry people out there that essentially start and question big organizations, what we can and they're freaking angry. Right. So I think and yeah, look, there's nothing, there's nothing common as well. Our nations were essentially forged based on doing jobs that people didn't want to do. And essentially, you know, we all bootstrapped, but now there's, there's essentially a lot of kids out there. And if you're a kid that's listening, I'd be this way. They're entitled little brats.

Andrew McVeigh (01:20:24.804)
Great, yeah.

Andrew McVeigh (01:20:41.198)
Yep.

Murdoch Gatti (01:20:47.991)
that don't want to do anything and they all thought pre-COVID they're going to become crypto warriors, So I think there's just a... But I think what's happening now is there may be a really big shift and hopefully Australia catches this as well for young entrepreneurs just to get out there and have a go, start their own businesses. think that trend is starting to really hammer as well.

Andrew McVeigh (01:20:53.026)
Yeah.

Andrew McVeigh (01:21:12.778)
I think so,

Murdoch Gatti (01:21:14.385)
then but access to capital. what I find when you're doing is interesting is, there's a lot of lenders out there that require hard based assets, but a lot of loans which you're doing doesn't sound like that's the case to an extent, a lot of it is but you will look at a business if a business has got cash flow coming in doesn't have any assets, you can work with that person or the grow like

Andrew McVeigh (01:21:30.786)
Yeah.

We can work with that person. In those scenarios, we get direct to guarantees and they generally have to have a asset that we can kind of get security on. So while we won't take security on, we'll take security on the cash flows, they generally do have to have a hard asset there that we can create some leverage against. So I think the biggest challenge is that we see, and I kind of agree with you, like I think there's a Goldilocks period and that's what I'd call it right now, is between now and

yeah, two years, maybe three. I think the US will boom. I think Australia will get some benefit from that. I think we're going to get more inflation run through that cycle. I agree with you. I've got three young kids and they look at the world very differently to how I looked at the world when I was a kid. But I think I agree with you. think now technology, think COVID made a very big shift in terms of how people look at what they want to do.

where they want to live and how they want to work. There is a lot more people going into that kind of freelancer type scenarios and things like that. So what we're trying to do is create product that we can deal with the harder portion of the economy. So the plumbers, the trades guys, the guys that drive trucks for a living, all that type of stuff. But then we also have solutions for...

guys that are more of the freelancer. So that might be our overdraft product where you have a card attached to it, you can access that, you can spend money when you need to, but you still need to have some kind of asset backing to kind of get that, otherwise you're paying much higher rates and things like that. So what we're trying to do is bridge the gap between traditional rational credit and lower rates and then provide people more flexible facilities that are more akin to kind of where the economy's going and what they need.

Andrew McVeigh (01:23:23.384)
but we still have the security coverage and we still get the strong borrower profile because again, as I said right from the outset, credit is one of those asset classes where your upside's capped, your downside's zero or 100 % loss. So it is skewed towards the downside. So you always need to make sure that you are focusing on how do I protect that downside? And a big portion of that is a pool of assets. It's like insurance, the bigger the pool, the more diversification.

It's not the same as an equity portfolio where you kind of have more diversification. You get to a point where any more diversification comes immaterial. Credit is not like that because credit is large-scale obligors, diversification, limiting your risk to each individual borrower. And then you get to a point where you only have a strained economic risk.

Murdoch Gatti (01:24:11.289)
Yeah, not to quit the industry of being. If anyone wants to learn more about Romara, how can they find you or yourselves or who should they get in touch

Andrew McVeigh (01:24:17.89)
Yeah, yeah, so we've got a website which is just ramara.com. We're pretty prolific on social media, but we've got a distribution team. So I think on the website we've got each of the guys, so Ben, Tim, Catalina, and Hugo, you can kind of reach out direct there. We do have some research reports that have been done by Foresight Analytics and SQM. I think we're on platforms as well. So Hub 24, Premium, Power App,

this isn't my forte, you can probably tell. Dash, I McCrory, AMP North, and I feel like there's one I'm missing. Yeah, I think we're getting on that. I don't think we're on that one yet.

Murdoch Gatti (01:24:58.767)
I Clark University maybe.

I think they've done a re-gig, the guys that left BT or something, went and re-gigged for a while, I don't think I've been hearing. I'm going to look at it again, that's pretty interesting.

Andrew McVeigh (01:25:08.396)
Yes, yes, yes. And probably more importantly, we've actually just, so for investors that are direct investors, we, as of today, launch our investment app. So through the App Store or Google Play. that means you can manage your portfolio from your iPhone like you do with your CommSec shares or CMC market or your bank account. You've got,

the ability to do all your applications, you see all of your reports, you've got your up-to-date balance, you can withdraw, you can top up, you can do all of that stuff from your app. So we're trying to create and open up, as I said before.

Murdoch Gatti (01:25:46.865)
Let's dig into this. was about to like, you know, leave it you're listening. Let's touch on this. Sorry, because this doesn't exist for this particular asset class. So if I've got a hundred grand just in cash, you know, you know, it's like that. doing anything. It's like a hundred grand in cash. Go to the, go essentially to the app.

Andrew McVeigh (01:25:48.77)
Yes.

Yep. No, correct. Yeah. Yeah. We see... Yep.

Andrew McVeigh (01:26:06.499)
you

Andrew McVeigh (01:26:11.726)
Yep. Yep.

Murdoch Gatti (01:26:12.121)
set everything up with the company or whatever it is, then you just do a direct debit request into that particular allocation. then it's monthly, isn't it? So hypothetically, the private credit income fund, right?

Andrew McVeigh (01:26:25.535)
Yeah, monthly distributions, quarterly redemptions. you can, yeah, so you can see, you'll get your distribution payment every month, you'll get it updated, you'll see your balance, your running balance, you'll get all the monthly reports through that. If you wanna top up your investment, it's easy once you've kinda got it, you just click top up and the amount and press it and we can take that from your bank account or you can deposit to our applications account or you could request your withdrawal if you wanted to.

Murdoch Gatti (01:26:28.865)
Redemptions. Yeah.

Andrew McVeigh (01:26:53.834)
withdraw half your balance, then you request that, you go in the queue. If you need to speak to us, you can do it through the app. So what we're trying to do is bring people an experience that they see on other asset classes. For an asset class, they traditionally haven't been accessed, or been able to get access to from private assets like this. Like we've got our credit funds on there, we've got our real estate funds, we've got our cash funds, and we're looking at how we can build out further product.

Where we see an opportunity set is kind of becoming a bit like the beta shares of private assets. So a platform that you can go to where you have a range of private-based assets. have different roles that they play in your portfolio, but you can manage your entire portfolio through that. And it gives you greater transparency in terms of the performance. gives you what you're traditionally used to now in terms of this access.

We see most other funds and managed funds and private asset funds, like it's hard, like you gotta complete these long forms with paperwork and all of that type of stuff, like it's not integrated, you don't do the KYC, all that type of stuff. So we've integrated all of that with green ID, so KYC's checked, you do your license, so everything that you traditionally do for every other app that you have, we've kind of built that and looking to build design, build on, and kind of release over time what will be an app that hopefully

people start to use to be able to manage some of their exposure to private assets.

Murdoch Gatti (01:28:25.221)
Now that's really interesting. I like the digitization. And as I say to everyone, why they use me is essentially for access. Many clients are just so opaque. When you step from equity, there's lot of families that have POMSEC accounts, et cetera. When they move into this space, they're often just, they're confused because they seem like Australian super arrests and they just use, stick it on the end and then it just goes consistently. People don't understand that, you know.

Andrew McVeigh (01:28:31.328)
.

Yep.

Yeah.

Andrew McVeigh (01:28:41.851)
Yeah, it's odd.

Yep.

Murdoch Gatti (01:28:50.769)
It is asset allocation. You know, mean, we're based on fiscal, fiscal and monetary policy and global macroeconomics. And you need to know in your head who are the best or top five in each particular space when essentially option is enclosed, where should I be going? What was the next key on the block? Like, essentially, what we're doing is playing fantasy primarily, but that's a notice. This is actually a question for me. I actually do not know the answers to this. It's been in my head for a while.

Andrew McVeigh (01:28:52.073)
Yeah, correct. Yeah.

Andrew McVeigh (01:29:05.433)
Yep. Yep.

Murdoch Gatti (01:29:21.105)
Can, like, know, a, you know, you can take dividend reinvestment with say, with CBA, is that even if I'm using an advisor using that wealth, is there essentially, I can take reinvestment on that firm? Like, can the money get back in? Because every single time we get a payment, it comes into the account. I've often, I've had one client go, you know, I can't be asked to keep doing that back because it's too late. They have the ability to essentially the equivalent of like, the dividend reinvestment back into the fund. It's always been on my mind.

Andrew McVeigh (01:29:23.894)
Yep.

Andrew McVeigh (01:29:42.334)
Yeah, yeah, yeah.

Murdoch Gatti (01:29:50.971)
So just accumulate. what ends up happening is then it becomes complicated.

Andrew McVeigh (01:29:52.704)
So, yeah, so I think if you're directing to the fund, you've got that option. If you come via the platforms, I think it has to get paid out. don't think there's, because everybody comes in on one custodian, right? So the biggest challenge that we would have with the platforms is we'll have 50 people on the platform. They come in as one line to us via that platform into our funds. We could do that, but we'd need to create a second unit class that would be a reinvestment unit class.

Murdoch Gatti (01:30:05.265)
Yeah

Andrew McVeigh (01:30:21.44)
And that would be continuous reinvestment. And that's how we'd solve that. to be honest, I've never had that question, but it's certainly something that if there's desire for it.

Murdoch Gatti (01:30:30.545)
No, it's been in the back of my head for a while. It's been in the back of my head for a while. It's like, because we're in the capital end and there's a delay on the money going back and essentially every single month we're losing, you know, essentially.

Andrew McVeigh (01:30:34.324)
Yeah.

Andrew McVeigh (01:30:40.8)
Well, that's good. I think I'm going to create now a reinvestment unit class off the back of this conversation.

Murdoch Gatti (01:30:49.969)
can't say a cut of the business any other way for the idea. Send me my invoice, it's fine. It's the consultancy generation.

Andrew McVeigh (01:30:50.944)
Hahaha

Yeah, that's okay, send it through.

Yeah.

Murdoch Gatti (01:31:03.793)
Andrew, look on that note, this has been brilliant. Learned a lot. That was fantastic. Andrew, you're not really, really out time.

Andrew McVeigh (01:31:05.033)
you

No worries. No worries Murdoch, it's been good to be here and I've certainly appreciated it. So thank you.

Murdoch Gatti (01:31:16.665)
take it easy and you

Andrew McVeigh (01:31:17.216)
Cheers mate, say about it, bye.