By Scott Murdoch
SYDNEY, Nov 10 (Reuters) – Australia’s corporate regulator said on Tuesday it would launch an official investigation into the A$3.4 billion ($2.3 billion) collapse of Sydney homebuilder Bathla, as it steps up its scrutiny of the country’s private credit funds.
Bathla’s collapse has raised questions about the role of Australia’s fast-growing private credit sector, which has become an important funding source for developers as banks retreat from riskier property lending.
The regulator, the Australian Securities and Investments Commission (ASIC), is also separately questioning private credit funds that lent to Bathla.
Bathla was put into administration in August and announced it had halted all of its remaining operations and stood down hundreds of workers after it was unable to secure more short-term funding.
ASIC Commissioner Simone Constant said the regulator would officially investigate Bathla companies for any wrongdoing that led to its collapse.
“Our inquiries are very broad because this is a large corporate collapse, there are many parties involved and famously there’s around 42 lenders at least,” Constant told Reuters.
An ASIC inquiry is typically an early-stage fact-finding exercise, while a formal investigation indicates the regulator is examining potential legal or regulatory breaches and may consider enforcement action.
HUNDREDS OF UNITS, EXTENSIVE NETWORK OF LENDERS
Bathla consisted of hundreds of companies and subsidiaries under its parent firm with an extensive network of lenders, court filings showed.
“There are 500 special-purpose vehicles, almost double the number of employees, so the range and breadth of our inquiries is extensive. The formal investigation is in relation to some of the conduct of the affairs of the Bathla group,” said Constant.
Bathla had 219 projects underway when administrators were appointed, according to court documents. These included 45 sites under construction, which accounted for a “significant” portion of the company’s debt.
ASIC said on Monday it had stopped Angas Securities, an Adelaide private credit firm, from receiving new investments after it did not disclose clearly an exposure in one fund to Bathla.
A separate ASIC report published on Tuesday showed many of Australia’s private credit funds were still considered too opaque and complex despite the regulator warning the industry needed to become more transparent.
($1 = 1.4520 Australian dollars)
(Reporting by Scott Murdoch; Editing by Edwina Gibbs)
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