Australia’s private credit market has experienced significant expansion in recent years, and Aura Group, led by Director of Private Credit Brett Craig, has positioned itself as a key player in this evolving landscape. Speaking at Emergence 2025 investment conference, Craig articulated the firm’s disciplined approach, emphasising a fundamental focus on risk management alongside the pursuit of attractive returns.

With a team largely drawn from traditional banking institutions, Aura Group brings a familiar rigor to the often less transparent world of private credit. Craig noted a welcome industry-wide shift towards scrutinising the risks undertaken to generate returns, a sentiment that aligns with Aura Group’s ingrained approach to meticulously measure, quantify, and disclose risk to its investor base.

“I think there’s been a really strong focus on returns, and now we’re starting to see the shift into what risk you’re actually taking to generate that return… as a team coming out of the banking sector, we are used to measuring risk, quantifying it, and obviously disclosing it to our investors.”

Established eight and a half years ago, Aura Group now manages over $1.1 billion in assets. Its flagship wholesale fund has delivered a compelling 9.63 per cent per annum return since inception, while maintaining a stable net asset value. This performance has consistently placed the fund among the top performers in the Asia-Pacific region, a ranking that factors in both absolute returns and risk-adjusted metrics such as the Sharpe ratio.

Craig highlighted the relative immaturity of the Australian private credit market compared to its counterparts in the United States and Europe. While private markets account for over 90 per cent of lending in the US and 65 per cent in Europe, Australia lags significantly, with only 9 per cent of lending currently occurring outside the traditional banking sector. This disparity, according to Craig, signals a substantial runway for growth within the Australian market.

“Australia: 9% of lending is done in the private market. So you can see, when you look at those global peers, we’ve got a very long way to run in the Aussie Market.”

Aura Group’s investment thesis is further underpinned by the funding gap that emerged for mid-market Australian corporates following the Global Financial Crisis. Recognising the critical role this sector plays in the national economy, Aura Group aims to deploy capital into Australian businesses through established and rigorously vetted lenders. Their selective approach, funding only a small fraction of the lenders they assess, underscores their commitment to quality and risk mitigation.

Unlike some high-growth-focused investment strategies, Aura Group’s primary objective is the preservation of capital. This is achieved through a highly diversified portfolio, currently encompassing over 13,900 loans across a broad spectrum of industries and geographies. This granular approach aims to mitigate the impact of sector-specific downturns and broader economic volatility.

“Our core objective as a team is to preserve capital… we are there to have stability of your capital… and then provide an exceptionally strong risk-adjusted return.”

Furthermore, Aura Group distinguishes itself through its cautious approach to lending. The firm predominantly focuses on property-backed construction loans and avoids unsecured lending, prioritising tangible security. This disciplined strategy, coupled with rigorous monthly impairment testing overseen by EY, reflects a commitment to safeguarding investor capital.

Interestingly, Aura Group’s private credit fund has not only provided stable income but has also mirrored the returns of the ASX200 accumulation index since its inception, albeit with significantly lower volatility. This performance, when juxtaposed with the more volatile returns of public equity and the often-challenged high-yield fixed income markets, underscores the potential of well-managed private credit to deliver compelling risk-adjusted returns.

By prioritising diversification, rigorous risk assessment, and a focus on stable returns, Aura Group is carving a significant niche in Australia’s expanding private credit market, offering investors an alternative avenue for income generation and capital preservation.