La Trobe Financial, a major Australian private credit manager, suspended trading and withdrawals for three of its funds listed on the Australian Securities Exchange (ASX) on Monday. The company announced the suspension in a statement, citing a disagreement with its auditor over asset valuation assumptions used in preliminary financial reports.
The halt affects investors in the La Trobe Financial 12 Month Term Account, the La Trobe Financial Credit Fund – Preferred Investment Account, and the High Yield Account. According to the company’s filing with the ASX, the auditor, EY, did not agree with certain assumptions made by La Trobe Financial in calculating expected credit losses and the fair value of the funds’ assets.
As a result of the review, La Trobe Financial stated it would mark down the net asset value of the affected funds. The company did not specify the exact size of the write-downs but noted it was taking the step to ensure the funds’ financial statements are finalized and audited.
“This action is a necessary step to ensure the orderly management of the funds and to protect the interests of all unit holders,” La Trobe Financial said in its public statement. The company confirmed that applications, withdrawals, and redemption requests for the three funds are suspended until further notice.
The disagreement centers on the valuation methodologies for loans within the private credit portfolios. These valuations are a key component in determining a fund’s overall value and the unit price for investors. The auditor’s role is to independently verify that a company’s financial reporting provides a true and fair view of its financial position.
La Trobe Financial, which manages approximately A$19 billion ($12.6 billion) in assets, is a significant participant in Australia’s growing private credit market. The sector has seen rapid expansion as non-bank lenders provide financing to businesses. This growth has also brought increased attention from financial regulators, including the Australian Securities and Investments Commission (ASIC), regarding valuation practices and transparency.
The company has not provided a specific timeline for when the trading halt will be lifted. It stated that the suspension will remain in place while it works with EY to finalize the asset valuations and complete the audit for the period ending June 30, 2024. All other funds managed by La Trobe Financial continue to operate normally.
