Receivers tip decent return from Provident

A Federal Court order froze Provident Capital's fixed term investment fund after court action by the debenture trustee. Receivers from PPB Advisory were appointed, and the fund was told to stop accepting new investments.

PPB Advisory were appointed receivers, and Marcus Ayres of PPB Advisory said they were hopeful of receiving a "meaningful" return for the roughly 3,500 investors in Provident's fixed term investment fund.

Close to 90% of the fixed term fund was funded through debentures worth about $131 million. According to Justice Steven Rares, there is a shortfall of about $28 million in those debenture investments.

Australian Executor Trustees, the trustee for the debenture fund, took court action after becoming concerned about a potential deficiency in Provident Capital's net tangible assets on behalf of debenture investors.

Yes. The court appointment affected only the fixed term investment fund. Provident's other funds — the high yield fund, the monthly income fund, and one fund held with Bendigo and Adelaide Bank — were reported as still running.

Provident's fixed interest and mortgage lending products are secured against a portfolio of non‑conforming mortgages over about 46 residential and commercial properties. The largest exposure (about 20% of the fund) is a construction loan on a new residential development, with the remainder largely in land banks.

PPB Advisory indicated there were about 45 loans covered by debentures in the fixed term investment fund.

The Australian Securities and Investments Commission (ASIC), which regulates Provident's deposit and lending activities, has been granted status as a "friend of the court" in the Federal Court matter.