Beyond the Basics: Unlocking opportunities in private credit 

Private credit has seen remarkable growth over the past decade, evolving into a key component of institutional and private wealth portfolios. Despite its maturity overseas, private credit in Australia is still in its early stages, particularly compared to its share of all corporate lending in more mature markets. Conservatively Australia’s private credit market has the potential to grow to a A$500 billion sector, underscoring the enormous opportunity for both investors and businesses seeking capital. 

For investors, private credit’s appeal lies in its dual promise of diversification and growth. However, not all private credit is the same. 

Commercial real estate (CRE) has traditionally dominated private credit allocations in Australia. However, its scalability and popularity have driven down returns. Additionally, CRE now faces challenges including construction delays, cost pressures and shifting societal needs post-COVID. By contrast, corporate lending—particularly in the mid-market—offers less competition and more opportunities to generate alpha. 

“Corporate lending is about specialisation,” Donnar explained. “We’re focused on the mid-market because it’s underserved, especially for businesses experiencing growth or undergoing transformational changes. This is where private credit can step in and add value.” 

Dinimus differentiates itself through its direct lending approach. Direct lending enables bespoke solutions for mid-market corporates, providing financing for growth, acquisitions and expansion. Unlike syndicated loans, where control is diluted among multiple lenders, direct lending allows Dinimus to maintain close oversight of the entire process—from origination to enforcement. 

This hands-on approach is critical, particularly when managing downside risks. “Structure, structure, structure,” emphasised Donnar. “By owning the origination process and conducting rigorous due diligence, we ensure that we’re not just taking on risks but actively managing and mitigating them.” 

Even in the best-structured deals, challenges arise. For private credit managers, the ability to respond effectively to such challenges is essential. Donnar shared examples of how Dinimus manages workouts, emphasising the team’s ability to step in early, align with stakeholders and find creative solutions that protect investor capital. 

In one instance, Dinimus lent to a manufacturer in the non-alcoholic beverage sector. When growth expectations fell short, Dinimus worked closely with the company to implement improvements and supported an equity raise. Ultimately, the business secured new backing, ensuring the preservation of both debt and equity value. “It’s not about walking away,” Donnar stated. “It’s about leveraging our experience to protect our clients’ investments.” 

Australia’s mid-market sector is a key driver of economic growth but often struggles to access traditional financing. Banks, constrained by regulatory and capital requirements, are typically less willing to support businesses undergoing change or expansion. This creates a gap that private credit can fill. 

“Mid-market businesses are underserved, particularly during periods of growth or acquisitions,” said Donnar. “Our role is to provide the capital and expertise they need to succeed.” 

Dinimus operates across a diversified range of sectors, ensuring no overexposure to any single industry. This approach, combined with Dinimus’ expertise in structuring complex deals, enables them to support a wide variety of businesses. 

Despite its growth, private credit remains underrepresented in many investor portfolios. One barrier is the perception of opacity around fees, structures and risks. Both Donnar and Whittingham stressed the importance of increasing transparency and education to attract new investors to the asset class. 

“Transparency builds confidence,” Whittingham stated. “As investors gain a better understanding of private credit’s nuances, they’ll see the value it offers—both in terms of returns and its role in portfolio diversification.” 

Contrary to popular belief, private credit managers like Dinimus often work in tandem with banks rather than competing against them. Banks frequently refer clients to private credit managers for transactions requiring bespoke solutions or intensive due diligence. Once the initial objectives are met, these businesses often transition back to traditional banking relationships. 

“This ecosystem benefits everyone,” said Donnar. “We bring the flexibility and speed that banks can’t offer, while they provide stability and long-term support. Together, we’re helping businesses grow.” 

The partnership between Scarcity Partners and Dinimus marks an exciting new chapter for both firms. With additional resources and a shared vision for growth, Dinimus is poised to scale its operations while maintaining its client-first approach. 

“This wasn’t about taking money off the table,” Donnar emphasised. “It was about finding a partner who could help us grow while staying true to our values. Together, we’re building something that has the potential to redefine private credit in Australia.” 

For wholesale investors seeking opportunities in alternative assets, private credit offers a compelling combination of growth potential, diversification and resilience.  

As Donnar aptly summarised, “Private credit isn’t just about capital—it’s about creating opportunities for businesses and delivering value for investors.” 

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