TOL - 10th Jul, 2025
“Cash is King”: The private credit fund built for reliability, not surprises
Private credit managers may look similar, but few play like Epsilon. Joe Millward’s rule: real cash beats fantastical returns.
If you're looking to join the private credit boom in Australia, there’s no shortage of options. But not all private credit managers are cut from the same cloth.
Like a cricket selector, investors need to study technique. Are they swinging for the fences with risky strokes? Or building a steady innings, protecting the wicket while putting runs on the board?
Joe Millward, Founding Partner of Epsilon Direct Lending, says that in a market crowded with return figures and marketing gloss, investors often miss the most important detail — how those returns are made.
“Cash is King... if the return is all cash, the volatility will be lower because you get the cash and you pass it on,” he explains.
Epsilon focuses on generating predictable, recurring income by lending directly to performing mid-sized Australian and New Zealand companies — typically with at least $5 million in earnings and long operating histories.
“Most of our companies have been around for 20, 30 years doing what they do. They’re not speculative bets," he says.
The Epsilon Direct Lending Fund targets a net return of the 3-month BBSW + 6%, which currently sits just over 10% per annum, paid quarterly. Importantly, 96% of the fund’s distributions are backed by actual cash interest collected from borrowers.
“We’re not focused on generating returns from warrants or equity kickers or leverage. That introduces tail risk. Our returns are real, realised, and repeatable.”
It’s a type of private equity-style private credit, where the team is hands-on throughout the lifecycle of the loan. “Right now, we’ve got 17 loans in the fund. And I can tell you the name of every CEO,” he says. “If we had hundreds of loans, I couldn’t do that... and we wouldn’t be in control.”
Experience matters — especially when things go wrong
Millward also points to the importance of having a manager who knows what to do when the unexpected happens. That’s where his team’s deep experience comes in — not just in originating and structuring loans, but in crisis management.
“Every month we sit down as an investment committee and re-underwrite every position. We ask ourselves: What’s changed about this company? And we’re on the phone to management right away," he says.
That level of vigilance is supported by rigorous due diligence — typically over 1,000 pages per investment — and strong downside protection. “When we lend, we’re typically only accounting for 40% of the capital structure. The rest is equity. That gives us a massive buffer.”
Why Australia? Why the middle market?
Millward says the sweet spot is the Australian and New Zealand middle market. These companies are often too small for big banks but too strong for small business lenders — and they operate in a creditor-friendly legal environment.
“In the US or Europe, you’re competing with 20 other lenders for the same deal. That compresses yields and forces people into covenant-lite lending,” he warns.
“We stay in Australia because the market is deep, diverse, and underserved — and the insolvency regime here favours lenders.”
Managed Fund
Epsilon Direct Lending Fund
Alternative Assets
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Access and availability
The fund is open to wholesale investors, including via major platforms like Netwealth, Hub24, Praemium, and Powerwrap. It offers monthly applications, quarterly distributions, and quarterly redemption windows, with lock-up periods depending on the investment.
Millward’s message is clear: Private credit should be about downside protection and consistent cash income. That’s what Epsilon is built to deliver.
Specialist corporate lenders
The Epsilon Direct Lending team specialise in lending to support the growth of middle market companies.
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Vishal has over 15 years' experience in financial journalism and has a particular interest in property, exchange-traded funds (ETFs), investing strategy and financial history.
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Epsilon Direct Lending disclaimer
The information contained in this video has been prepared by Epsilon Direct Lending Pty Ltd (ACN 636 861 464) (EDL, Manager or Epsilon). Epsilon is a corporate authorised representative (number 001281871) of Epsilon Investment Management Pty Ltd (ACN 680 224 284) the holder of AFSL number 564491 and is given to only 'wholesale clients' (as defined in the Corporations Act 2001 (Cth)). By receiving or viewing this video, you are representing that you are a ‘wholesale client’ and that you will keep this video and the information therein confidential including not to provide it to retail clients. No financial product advice is provided in this video and nothing in it should be taken to constitute a recommendation or statement of opinion that is intended to influence a person or persons in making a financial product decision. Any advice given by EDL, its associates or related parties in connection with this video is general advice only.
Purpose
This information in this video is intended to provide a general outline in relation to the Epsilon Direct Lending Fund (EDL Fund) and the Epsilon Direct Lending Senior Loan Fund (SLF) (collectively “Funds”) only and is not intended to be a definitive statement on the subject matter. This video is not intended to be relied upon by recipients given the contingent nature of the content matter. The information in this video does not take into account your objectives, financial situation or needs.
No verification or due diligence exercise of the information contained in this video has been undertaken. This video contains a summary of the proposed investment terms of the Funds and certain other documents. Prospective investors should not construe the contents of this video as tax, financial, legal or investment advice. This video does not purport to be complete, accurate or to contain all information which its recipients may require to make an informed assessment of whether to invest in the Funds. Before acting on the information contained in this video, or making a decision to invest in the Funds, potential investors should make their own enquiries and seek professional advice (including financial product advice from an independent person licensed by the Australian Securities and Investments Commission (ASIC) to give such advice) as to the investment in the Funds and its appropriateness in light of their own circumstances. This video does not constitute an offer for the issue, or sale, of any securities. Neither this video nor the information contained in it or any other information supplied forms the basis of any contract or any legal obligation.
Contents
Forward-looking information in this video – which can be identified by the use of forward-looking terminology such as “may,” “can,” “will,” “would,” “should,” “seek,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” “target,” “believe,” or the negatives thereof or other variations thereon or comparable terminology including statements of intention, projections and expectations of investment opportunities and rates of return – is provided as a general guide only and should not be relied upon as an indication of the future performance of any investments managed or arranged by EDL. No representation is made as to future performance or volatility of any investments managed or arranged by EDL. In particular, there is no guarantee that any investment program outlined in this video may be successful. Persons should rely solely upon their own investigations in respect of the subject matter discussed in this video and carefully consider the risks before deciding to invest.
Any past performance information given or financial models of prospective returns in this video is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.
Any comparative index shown is provided solely for informational purposes as an indication of the performance of various capital markets or alternative investment strategies in general. Comparative indices are not benchmarks, nor should one conclude that the investment strategy will or will not be correlated with an index. Comparisons of alternative investment strategies to indices are subject to material inherent limitations. In particular, the universe from which the components of an alternative investment strategy are selected includes a significant element of “survivor bias”. Accordingly, indexation of alternative investment strategies tends to overstate the beneficial aspects of these strategies while obscuring certain risks, including the “risk of ruin.”
This video may contain hypothetical performance results, which have inherent limitations. Further information about assumptions made in deriving these results may also be found throughout this video. No representation is being made that the Fund’s portfolio will or is likely to achieve results like those shown. In fact, there can be significant differences between hypothetical and actual results. One deficiency with any hypothetical construction is the benefit of hindsight. Whilst due care has been given to minimize the effect of hindsight upon the results, it cannot be eliminated. In addition, hypothetical investing cannot consider all risks associated with being able to faithfully execute the investment strategy as and when the model indicates. There are other factors related to the proposed investment strategy that cannot be fully accounted for in the preparation of hypothetical performance results and potential investors should be way of placing undue reliance on the hypothetical results.
Fees and costs stated in this video are exclusive of any applicable GST. All dollar amounts are in respect of Australian dollars (unless specified otherwise). EDL gives no recommendations or opinions about whether or not an investment is suitable for you. Further, EDL gives no express or implied representation or warranty as to the accuracy or completeness of the information, opinions and conclusions contained in this video nor the value of any investment that it arranges or manages. In preparing these materials, EDL has relied upon and assumed, without independent verification, the accuracy and completeness of all information available to EDL. Investors should consult their financial adviser in relation to any material within this document.
Exclusion of liability
EDL, Epsilon Direct Lending Holdings Pty Ltd and their founders, directors, employees and agents (Group) do not accept liability for any loss or damage suffered or incurred by the recipient or any other person or entity however caused (including negligence) relating in any way to this video including, without limitation, the information contained in it, any errors or omissions however caused, or the recipient, or any other person or entity, placing any reliance on this video, its accuracy, completeness, currency or reliability. The Group does not accept any responsibility arising in any way for any errors in or omission from this video or for any lack of accuracy, completeness, currency or reliability of this video. The Group does not accept any responsibility to inform the recipient of any matter arising or coming to their notice that may affect any matter referred to in this video. The Group does not authorise any person to make any statements or representations that are not expressly contained in or contemplated by this video. Any liability of and member of the Group to the recipient or to any other person or entity arising out of this video is, to the maximum extent permitted by law, expressly disclaimed and excluded.
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Vishal has over 15 years' experience in financial journalism and has a particular interest in property, exchange-traded funds (ETFs), investing strategy and financial history.
Expertise
Vishal has over 15 years' experience in financial journalism and has a particular interest in property, exchange-traded funds (ETFs), investing strategy and financial history.
Expertise
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