Multi-seller warehouse starts to take shape

John Kavanagh

The multi-seller warehouse proposal that was recently put to the Australian Office of Financial Management has attracted more than double its initial level of interest from lenders, giving its promoters confidence that the program will get off the ground.

Edward Jones, director of finance advisory group NEU Capital, said questionnaires were being sent out to interested parties and the responses would allow the promoters to put together some firm numbers.

NEU Capital is part of a consortium - which also includes AMAL Trustee, Grant Thornton and Clayton Utz - that approached the AOFM with a proposal for a multi-seller warehouse that the AOFM would support through Structured Finance Support Fund.

Last month, The AOFM said it would work with the consortium with a view to the SFSF becoming an investor in the securities issued under the program.

The Small & Medium Originator Program would aggregate the portfolios and capital requirements of multiple originators into a multi-seller special purpose vehicle. Issuance would be arranged in clusters, grouping product areas such as consumer loans, small business loans, residential mortgages and property development finance.

“It is a mastertrust, with the program able to create multiple trusts. Each trust brings together a group of originators, reflecting a single product,” Jones said.

According to the SMOP proposal, all receivables would be cross-collateralised and subject to uniform eligibility criteria, portfolio parameters, reporting requirements and governance.

“Broad standardisation reduces the marginal cost of onboarding and managing each originator, delivering a scalable and cost-efficient structure,” the proposal says.

The consortium said that after publication of an initial discussion paper, it received A$1.5 billion of demand for funding from more than 24 “qualified originators”.

Jones said the number of interested parties has doubled since then. Most of them have ever done a term out before.

He said the consortium has also has a “pleasing” level of interest from investors.