Warburg Pincus commits $490m to MA Financial's credit vehicle
11:08am today
The news: US private equity firm Warburg Pincus has committed $490 million to MA Financial Group’s $1 billion real estate credit vehicle, aimed at addressing the funding gap in Australia’s residential housing market.
The numbers: New York-based Warburg Pincus estimates that over the next five years, the cumulative dwelling shortage in Australia is projected to reach approximately 254,000 units, alongside an anticipated 30% increase in annual population growth. With traditional financiers tightening credit, there is an estimated US$37 billion ($55 billion) funding gap that needs to be addressed, the firm said.
The context: Warburg Pincus said the commitment, made through its Warburg Pincus Asian real estate fund (WPARE), underlines its conviction in the investment opportunity of providing credit solutions to address the funding gap in Australia's residential market, as well as the firm's confidence in ASX-listed MA Financial as the right operating partner to execute the strategy.
Through the real estate credit vehicle, Sydney-based MA Financial will originate and manage real estate credit facilities for Australian developers and projects.
Over the last six years, Warburg Pincus has established a presence in Australia by supporting portfolio companies such as ESR and StorHub, as well as through its WPARE joint ventures.
What they said: Takashi Murata, managing director, co-head of Asia real estate and head of Japan at Warburg Pincus, said: "We have built a strong conviction in the secular tailwinds of Australia’s residential market, driven by the immigration-led population growth and the undersupply of housing primarily due to a tight credit environment and higher construction costs."
"The new vehicle will help meet the demand from sophisticated borrowers as Australia tackles its nationwide housing shortage," he said.
MA Financial's joint CEO Julian Biggins said: "Warburg Pincus’ investment serves as a strong endorsement of MA Financial and reinforces their confidence in our real estate investment and debt structuring capabilities.
"With the commitment and support of Warburg Pincus and the encouraging responses received from like-minded global investors regarding this strategy, we are optimistic about the vehicle’s potential for future success," Biggins said.
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