The Australian Office of Financial Management has approved a A$65 million investment by the Australian Business Securitisation Fund in a Prospa warehouse.

The Prospa investment takes the number of ABSF investments to four since it was established in 2019.

In September last year, it made an $87.5 million mezzanine investment in a GetCapital (now Shift) warehouse and $30 million in an OnDeck Australia warehouse.

It invested $250 million in a Judo Bank warehouse in 2020.

The government committed $2 billion to the ABSF over four years to invest in securities issued by warehouses and special purpose vehicles established by small business lenders.

It has made slow progress, impacted by COVID and also the need to develop a standardised loan data reporting framework for funding SME lenders via securitisation.

The securitisation of SME lending is difficult because the market lacks homogeneity and loan performance reporting is inconsistent.

As part of the ABSF program, the AOFM and the Australian Securitisation Forum have worked on the development of standardised SME loan reporting. The ASF published the first version of a reporting template last year

Treasury is currently undertaking a review of the ABSF. In a consultation paper, it asked industry participants whether the ability of lenders to provide SME finance has improved and to what extent this can be attributed to the ABSF, and to what extent ABSF activity has influenced SME loan rates. 

It also wanted to know whether the principles and processes established for the ABSF by the AOFM are appropriate and whether the legislative settings remain fit for purpose.

In the meantime, the AOFM said it is still considering investments and will invest in warehouses and public term transactions.