Aussie alternative asset manager Salter Brothers has agreed to buy private credit fund manager Causeway Asset Management Limited for an undisclosed amount, signaling growing momentum in Australia’s M&A market.
Melbourne-based Salter Brothers – which has more than $4 billion in AUM and already specializes in property, credit and equities – said the purchase of the boutique shop adds expertise in real estate credit to its portfolio.
"After successfully completing a number of significant transactions in the past year, this acquisition in corporate credit adds to our deep domain expertise in real estate credit," David O'Connor, managing director of debt capital markets and Salter's credit fund, told Australian Broker. "We see significant opportunity to scale our participation in the Australian lower mid-market corporate sector, which currently exceeds $500 billion in borrowing appetite."
He added that private credit in Australia's middle market "remains underserved by banks, due to regulatory capital impediments, and by many global and local private credit players who seek to focus on the larger corporate lending market."
In the case of Causeway, the Sydney-headquartered shop, which was established in 2003, has more than $600 million in funds under management. The firm focuses on direct lending in Australia, working with small-to-medium enterprises (SMEs) and mid-market firms, companies that often fall between the cracks of traditional financing. The team has a background in credit and has handled everything from structuring new loans to managing complex restructurings and workout groups.
"We are impressed with [Causeway's] expertise, experience and reputation in the industry and believe they will complement our credit capabilities and will be instrumental in driving our private credit growth ambitions," said Paul Salter (pictured above right), co-founder and managing director of Salter Brothers.
Global M&A activity is showing signs of a rebound – and Australia is no exception.
Worldwide deal volume reached approximately $5.27 trillion (or US$3.4 trillion) in 2024, up 8% from the previous year, according to MergerMarket data. In Australia, total deal value climbed by nearly 30%, rising from more than $110 billion to nearly $142 billion, (or US$71 billion to US$91.5 billion), over the same period.
Examples aren't hard to find Down Under. Aussie private equity firm Recludo Group, which works by purchasing mortgage brokerages, recently revealed it had snapped up three firms since the start of the year. On the lender side, members of Bank Australia and Qudos Bank approved a merger in April. That same month, Regional Australia Bank and Summerland Bank formally agreed to merge their operations by 2026. There's also Auswide Bank and MyState Bank Limited, G&C Mutual Bank and Unity Bank, Teachers Mutual Bank Limited and Australian Mutual Bank Limited, and People's Choice and Heritage Bank.
“The increase in investor engagement within the private debt asset class over the past five to eight years reminded us of the private equity sector’s journey since the early 2000s," said Mike Davis, Causeway founding director.
Salter's O’Connor said brokers stand to gain by broadening their expertise and developing an understanding of private credit.
"We are focused on lending to businesses that have a strong growth trajectory in their industry sector, which makes this a significant opportunity for intermediaries who service their needs as well," he said.
"Typically, this sector has been well served by mid-tier accounting firms, corporate and debt advisory firms, stockbrokers and occasionally finance brokers," O'Connor said. "Given the bespoke nature of every loan we review, we find that there are limited numbers of brokers who service this market well. Many are motivated by more recipe-driven lending, such as property and equipment-based financing opportunities. As the sector grows, however, we expect to see more specialist brokers enter the space.
"We find the good operators in this sector typically spend significant time understanding the underlying borrowers business and building due diligence packs for us to provide a comprehensive introduction to the client," he continued. "As part of this it is also key that they can maintain an ongoing relationship with the client to monitor their progress and create the opportunity for them to provide more solutions as the borrower progresses on their intended growth path."
