ASIC blocks Fidante issuing units in $799.9m Ares credit fund

The Australian Securities and Investments Commission issued an interim stop order Oct. 13 blocking Fidante from issuing class A units in the Ares Global Credit Income Fund, a $799.9m portfolio, Alternative Credit Investor reported.

The 21-day order bars Fidante from dealing in the fund's class A units, giving a product disclosure statement or advising retail clients about it. ASIC said Fidante had not met its design and distribution obligations and that the offer was unlikely to be consistent with retail clients' objectives, financial situation and needs.

For Australian advisors and platforms, the practical effect is a 21-day freeze on new class A unit subscriptions and on retail advice about the fund. The dispute is over the target market determination, not the fund's holdings. ASIC objects to three settings: a medium-to-high risk and return profile presented alongside capital preservation, allocations of up to 50% of a client's investable assets, and the timeframe for consumers to access capital.

The fund invests in global bonds, syndicated loans, asset backed securities, derivatives and cash, the report said.

ASIC has intervened in several retail credit offerings in recent weeks. The week before the Ares order it halted offers in three private credit funds managed by Australian Secure Capital Fund; the month before it banned three private credit products offered by Melbourne Securities Corporation. Commissioner Simone Constant said the regulator would use its tools to act "swiftly to intervene early" where products may be reaching retail investors they were not designed for.

The order is valid for 21 days from Oct. 13, and the next milestones are whether ASIC extends it and whether the allocation ceiling and access terms in the target market determination change.