Australian private credit manager Metrics Credit Partners has suspended investor redemptions and delayed financial results for three of its listed funds after its auditor, KPMG, declined to sign off on the full-year accounts by a September 30 filing deadline. The company, which manages roughly A$40 billion in assets, said the freeze will remain in place until audited reports are filed.
What's behind the dispute?
The holdup comes down to valuation. Metrics said KPMG challenged the assumptions used to estimate the “fair value” of some unlisted commercial real estate equity holdings, after the firm flagged write-downs on those investments. Fair value is an accounting term for the estimated price an asset would fetch in an orderly sale, and it directly feeds into the reported net asset value (NAV) of the listed vehicles—the portfolio's total value minus any debts.
For investors in these funds, NAV is the key number: it determines the price at which units are bought and sold, and it underpins the income they receive. When an auditor questions those valuations, it raises uncertainty about whether the reported NAV truly reflects what the assets are worth.
Why private credit is in the spotlight
Private credit—lending done outside traditional banks—has grown rapidly in recent years, attracting everyday investors through listed funds that promise higher yields than public bonds or savings accounts. But that growth has come with increased scrutiny, especially as interest rates have risen and some borrowers have struggled to repay.
Metrics' situation is not isolated. Other private credit managers have faced similar challenges when redemption requests spike or when underlying assets become hard to price. In a related development, Goldman Sachs' $18.2 billion private credit fund saw redemption requests cool to 2%, suggesting that investor anxiety in the sector may be easing—at least for some players.
The freeze at Metrics is a reminder that private credit funds, despite their name, are not as liquid as a bank account or a publicly traded stock. Redemption gates and suspensions are tools that fund managers use to prevent a rush of withdrawals from forcing asset sales at fire-sale prices, which could hurt all remaining investors.
What it means for investors
For investors holding units in the affected Metrics funds, the immediate impact is that they cannot withdraw their money until the audit is resolved. That could take weeks or months, depending on how quickly the valuation dispute is settled.
More broadly, this episode highlights the importance of understanding how private credit funds value their assets. Unlike listed equities, where prices are set by public markets every day, private credit holdings are often valued using models and assumptions. When those assumptions are challenged, the reported NAV can change, and that can affect both the income investors receive and the price they get when they sell.
Investors should also note that this is not the first time a private credit manager has faced valuation questions. The sector's rapid expansion has led to a wide range of asset quality, and auditors are paying closer attention. As credit costs for even the largest borrowers have hit record highs, the pressure on smaller and mid-sized lenders is likely to persist.
What to watch next
The key date to watch is when Metrics files its audited accounts. Until then, the suspension remains in place, and investors will be looking for clarity on two fronts: the size of the write-downs and whether the auditor ultimately signs off on the revised valuations.
For the broader private credit market, this episode adds to a growing list of cautionary tales. While private credit can offer attractive yields, it comes with risks that are different from those of public markets. Investors should weigh those risks carefully, especially when funds hold assets that are difficult to value or sell quickly.
In the meantime, those with money in the affected funds will have to wait—and watch how the valuation dispute unfolds.
