Income Asset Management sees Finexia mint first $25m for childcare fund

Finexia (ASX:FNX) has realised $25 million in funding through a deal with Income Asset Management (ASX:IAM)
This is the first tranche of an overall $50 million deal
Investor demand was strong for the first Finexia issuance
The $25 million will go to childcare operators as part of Finexia’s childcare fund
That fund is designed to offer investors a recession-proof vehicle
Shares in IAM last traded at 12.5 cents

ASX-listed debt capital market specialists Income Asset Management (ASX:IAM) has seen Australian-listed financial Finexia (ASX:FNX) take its first $25 million off IAM.

Through the first tranche of a securitised note issuance via IAM, Finexia now has $25 million to deploy into its Finexia Childcare Income Fund.

“The funds will meet current funding demands … [including the acquisition] and construction of childcare centres across Australia,” Finexia wrote.

Finexia targeting strong operators

Finexia noted it only loans funds to childcare operators that meet its recipient balance sheet requirements.

Its ultimate goal is to establish a fund resistant to market volatility and recession-proof.

The name of the game is childcare centres with demonstrably recurring revenue.

For those playing at home, FNX is a microcap at $12.5 million, versus IAM’s $35 million.

Today’s $25 million is part one of a $50 million package, with the latter half expected to be retrieved in a second tranche issuance.

It’s hopeful the second tranche will go off without a hitch, noting today that investor demand for this first tranche was “high”.

Income Asset Management has had a bullish 2023, most recently striking a deal with Netwealth to offer its customers access to the bond market.

Because government (and corporate) bonds have been heavily sold off, yields are up – with 10Y Australian yields hitting decade highs.

Higher government bond yields actually mean there’s less confidence in a nation-state’s longevity.

However, many are expecting the era of current panic and uncertainty to eventually subside.

Helping that could be bonds with historically attractive yields in the range of five per cent.

Across IAM’s FY23, the company saw total revenue increase 88 per cent.

IAM also saw a company it owns a quarter stake in merge with another privately held financial services firm back in September.

IAM shares last traded at 12.5 cents.