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Updated ABSF instructions, second round concludes

1 April 2022

The AOFM provided an update on the second investment round of the ABSF on 14 September 2021.

The AOFM now advises that another investment proposal has been approved by the ABSF delegate.

An allocation of $65 million has been made to a combined mezzanine/senior investment in a warehouse sponsored by Prospa Advance and arranged by a European bank, who will also act as a senior financier in the warehouse facility.

This approval concludes the second ABSF investment round.

On 5 November 2021, the AOFM released a set of standing instructions to access the ABSF. Two key changes announced were that subsequent investment rounds would not include a deadline for making submissions and the AOFM encouraged proponents to engage with the AOFM prior to making a submission.

To further streamline the process, the AOFM today also announces that proponents will no longer be required to complete the SME lending market survey (Item 4 under Proposal Format).

While this market survey was useful for improving the AOFM’s familiarity with the SME lending market in the early stages of the program, it has served its purpose, and the experience gained by the AOFM in implementing the Structured Finance Support Fund has complemented the survey process.

Where the AOFM identifies a need for additional insights into specialist segments of the SME lending market, it may do so via industry roundtables and/or direct engagement with market participants.

The AOFM continues to encourage SME lenders from underdeveloped sectors of the SME lending market, including unsecured lending and secured lending backed by collateral less commonly seen in asset backed securities, to engage with the ABSF. It is noted that some originators engage in lending activities over a range of assets classes – from developed through to underdeveloped - and the AOFM will consider investments backed by mixed collateral pools that are predominantly (but not exclusively) comprised of underdeveloped asset classes.

The AOFM will continue to invest in warehouse facilities but will also consider investing in public term transactions, where doing so would serve to reduce execution risk, subject to it crowding-in third party investment rather than displacing it.

An amended version of the standing instructions to access the ABSF can be found here.