Private credit firm CVS Lane says it had significant loans to collapsed property developer Bathla. (Supplied: Bathla website)
Stress in Australia's private credit sector is intensifying.
A private lender with significant loans to collapsed developer Bathla called CVS Lane is the latest private credit firm to limit "investor redemptions".
The ABC has confirmed that the investment manager told investors on Thursday that its CVS Lane First Mortgage Fund and CVS Lane Property Finance Fund had exposure to Bathla across nine different loans.
Investor redemptions are when investors in private credit firms seek to get some or all of their money returned in the face of concerns about the safety of their investment because of potentially overly risky lending.
Major Sydney residential developer Bathla Group announced earlier this week that it was going into administration after months of mounting financial pressure, owning more than $3.5 billion.
Bathla Group says tax changes, softening sales and construction costs have led to its plight.
Administrators from Teneo were appointed to its main corporate entity, Universal Property Group, as well as Raj & Jai Construction, a company linked to the Bathla Group, documents lodged with ASIC show.
CVS Lane is reported to have told investors it had "determined to temporarily suspend the processing of application and redemption requests across the funds".
"The funds' redemption provisions are designed to balance investor liquidity with the interests of all investors in the funds," it told clients.
CVS Lane has $2.1 billion under management.
"The trustee considers a temporary suspension to be in the best interests of investors as a whole, with relevant factors including the current uncertainty surrounding the Bathla administration and the need to ensure any decisions … are made on the basis of the best available information," CVS Lane is reported to have told investors.
There are about 40 private credit funds invested in Bathla, with exposures ranging from $1.5 million to $340 million.
CVS Lane told investors it would update them next week and reassess its position by the end of October.
Among the other private credit firms exposed to Bathla, the ABC has contacted Balmain, Centuria Bass, Credit Connect, CVS Lane, Keyview, La Trobe, Ray White Capital and Trilogy for comment.
