Finexia Childcare Income Fund

The Finexia Childcare Income Fund (‘the Fund’) was launched in October 2022 and is managed by Creative Capital Group Pty. Ltd. A wholly owned subsidiary of Finexia Finance Group Ltd (ASX: FNX) (‘the Manager’ or ‘the Group’). The Fund provides funding to select experienced childcare operators primarily for the purpose of funding recently opened or reopened childcare centres during the ramp-up period. Once a childcare centre reaches approximately 80% of full capacity, banks are then prepared to provide debt funding. This capacity threshold is typically achieved at around the 1-year anniversary following the re- / opening of a childcare centre. As such, the Fund’s loans are transitional lends and almost invariably issued for a 12-month term. 

The Fund aims to invest in a portfolio of loans issued to childcare leasehold operators, secured by leasehold titles for the purposes of either trade-up transitional finance or refinancing for established childcare centre. The Fund may offer some protection against inflation as returns are earned from the interest generally charged at a floating rate above the RBA Cash Rate. The Fund targets a return of 5.65% p.a. above the RBA Cash Rate net of fees paid to the Manager and Fund expenses. Currently, the RBA Cash Rate is 3.85%, equating to a target return of 9.5% p.a. 

The Credit Committee at Finexia Childcare Income Fund serves as the authoritative body overseeing all proposed loans and other financial accommodations. Tasked with the responsibility of evaluating loan applications, the Committee examines submissions brought forth by the sales team. This review process ensures a thorough assessment, leading to a well-informed decision on the approval or rejection of each loan. 

With a notification period of 24 hours for a Credit Committee meeting, the Committee efficiently approves the credit checks conducted by the sales team. The Committee comprises Neil Sheather, Patrick Bell, Jean Marc Li, and Scott Smith, who ensure sound and strategic decisions for the Fund’s credit-related matters. We note the Manager is planning to add an additional independent investment committee member over the next 12 months. This appointment is expected to focus on an individual with significant experience and expertise in the Australian childcare sector.  

The Manager has recently appointed a new board member, specifically Robert Spano, as a Non-Executive Director. Robert has over 40 years of experience in corporate finance and broader credit markets in Australia and offshore.