In our last two videos Brett Craig of Aura Group covered off the significant funding gap and opportunity in the SME market, and how the sector is adapting to a post-bushfire and COVID-19 environment. Here, he delves a bit deeper into his investing strategy. Whereas private credit arrangements are typically made with underlying borrowers, Aura provides facilities to non-banks who then lend money to small businesses.
“We look at the lender, we assess the management team of the lender, we look at their underlying IT infrastructure, credit and arrears management processes. We form a view on how robust that lender is and their target market and see whether there’s a robust opportunity in the space they’re targeting.”
Brett talks through how that works, how returns are achieved, risk management and where SME debt capital could fit into an investor’s portfolio.
The Aura High Yield SME Fund aims to provide stable monthly income from a diversified portfolio of debt securities, principally issued by lenders to SME businesses in Australia. Find out more here