Regulatory update

ASIC stops two Angas Securities funds over PDS and Bathla disclosure: lessons for private credit

ASIC has made interim stop orders against two Angas Securities mortgage funds over gaps in their PDSs. Here’s what it found, and what private credit fund managers should check now.

ASIC has made interim stop orders preventing Angas Securities Limited from offering interests in two of its managed investment schemes, the Angas Prime Income Fund and the Angas Direct Mortgage Fund.

ASIC’s concern is disclosure. It says the funds’ product disclosure statements (PDSs) don’t adequately disclose Angas Securities’ own financial position, or one fund’s exposure to the collapsed Bathla Group. It’s the latest sign that ASIC is watching private credit closely, and is prepared to act quickly when investors aren’t getting the full picture.

What ASIC did

According to ASIC’s media release, the interim stop orders prevent Angas Securities from offering, issuing, selling or transferring interests in:

• the Angas Prime Income Fund, a pooled mortgage fund, and
• the Angas Direct Mortgage Fund, a contributory mortgage fund.

Angas Securities holds an Australian financial services (AFS) licence and is the responsible entity of both funds. ASIC will consider whether to make final stop orders after giving it an opportunity to be heard.

How stop orders work

Under section 1020E of the Corporations Act 2001 (Cth), ASIC can stop a financial product being offered if it’s satisfied the PDS is defective, for example because it’s misleading or leaves out material information. ASIC can make an interim order straight away, before holding a hearing, to stop further investment while it decides whether a final order is needed. An interim order isn’t a finding that the fund has failed, and it doesn’t by itself decide what happens to existing investments.

What concerned ASIC

The manager’s own finances

ASIC says the PDSs for both funds don’t disclose material information about Angas Securities’ own financial position. That includes a net asset deficiency, a breach of the net tangible asset requirements that apply under its AFS licence, and a proposed capital raising. They also don’t explain what could happen to the funds if Angas Securities can’t raise enough capital to continue as a going concern.

Angas Securities’ financial statements say the breach was caused by a loss crystallising on a first mortgage loan investment, which wasn’t directly related to the Bathla Group. Its directors expect the capital raising to be resolved by 31 December 2026.

Bathla Group exposure

For the Prime fund, ASIC says the PDS doesn’t adequately disclose a range of material information, including:

• its exposure to Bathla Group borrowers
• defaults
• liquidity
• loan-to-value ratios
• portfolio diversification.

It also says information about loan-to-valuation limits isn’t presented in a clear, concise and effective manner, which is the standard the Corporations Act sets for PDS content.

The Bathla collapse and private credit

ASIC Commissioner Simone Constant said the collapse of the Bathla Group highlights the risks that can emerge in private credit when investors aren’t kept informed. ASIC is working with Bathla’s voluntary administrators to trace the $3.2 billion lent to the group, and is focused on understanding how many retail investors are affected.

ASIC says it will keep stepping up its scrutiny of private credit, and will publish the results of its next private credit surveillance on 10 November 2026.

Lessons for fund managers

The Angas orders aren’t only about one manager. They show what ASIC expects from every responsible entity offering private credit or mortgage funds to retail investors:

• Keep your PDS current. When circumstances change, such as defaults rising or a major borrower collapsing, your disclosure has to change too. Consider whether you need a supplementary or replacement PDS.
• Disclose your own position. If the responsible entity’s financial health could affect investors, including a breach of licence financial requirements, investors need to know.
• Be specific about loan book risks. Exposure to troubled borrowers, defaults, liquidity, loan-to-value ratios and concentration should be clear, current and easy to find.
• Report against the benchmarks. Unlisted mortgage schemes should report against ASIC’s RG 45 benchmarks and disclosure principles, and explain any benchmark they don’t meet.
• Review your target market determination. A material change in a fund’s risk profile can be a review trigger under the design and distribution obligations.

We recently wrote about another ASIC stop order, made against Fidante over DDO concerns. Our design and distribution obligations and licensing teams can help you review your disclosure and governance.

If you’re an investor

If you’ve invested in either fund, the stop orders mean new interests can’t be offered or issued while they’re in place. They don’t by themselves mean your investment has been lost. Read any updates from Angas Securities carefully, and get advice before making decisions about your investment.

Frequently asked questions

This article is general information only and is not legal advice. Please contact us for advice about your circumstances.

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