Who was Rixon Capital and how does it work?
Rixon Capital is an Australian Financial Services licenced Investment Manager.
It manages the Rixon Income Fund, a secured income-only SME private credit fund.
The Rixon Income Fund is structured as a unit trust, accessible to Wholesale Investors and has a Target Return of 10-12% p.a. (net of costs & fees) with distributions paid monthly.
As the Investment Manager of the Rixon Income Fund, Rixon Capital is responsible for identifying, diligencing, and managing a portfolio of secured, high yield loans made to qualifying borrowers.
All investor funds and borrower payments are held by an independent third-party, Australian trustee service provider AMAL Trustees.
Who is behind it?
Rixon Capital was founded by banking executives Patrick William and Shrikaanth Balasubramaniam, and Tanooki Ventures comprising fintech entrepreneurs Dallin & Luke Howes, and Blair Murphy who built and exited Proviso.
What makes Rixon different?
The Rixon Income Fund is focussed on providing a non-dilutive debt funding solution to an underserviced niche in the SME market, writing cheques of $2m - 20m to fund growth.
This niche is characterised by borrowers seeking relatively small loans or from those with underlying complexity, making them unattractive to traditional bank lenders. Non-bank funders who do participate in this sector often seek exposure to borrower equity.
In contrast, Rixon has a mandate from its investors to focus on this niche and to seek a traditional credit return – security to protect investor capital and cash interest payments to deliver regular income. No exposure to equity in any form is permitted.
The Rixon team have backgrounds in private credit, investment banking and listed equity research and are able to quickly understand and diligence potentially complex business models and security structures.
What type of fintechs should reach out?
The ideal fintech is one whose business model generates recurring revenue.
Contracted and low turnover subscription revenue, or earnings from providing a financing solution is ideal. In both scenarios, Rixon would secure its lending against the revenue generating assets base.
As a specific example, once a fintech in the financing space has achieved scale, a natural progression is to transition to a warehouse funding facility that will permit it to drive substantial growth at an attractive rate of return.
Rixon can effectively provide a miniature warehouse facility, permitting the nascent fintech to both drive growth and to establish an operational track record to ease the transition to a substantial facility in the future.
Why are you excited about fintech?
The team have been consistently impressed by the level of sophistication amongst potential fintech borrowers. A key point of differentiation from the broader SME market is that the fintech entrepreneur’s goal is to become a unicorn – and this is reflected in their systems, processes, and strategy making diligence and structuring an efficient process.
An added bonus is the privilege of seeing & hearing firsthand some of the smartest fintech solutions in the market. As staid fin not-tech professionals, we do a lot of ooh-ing and ahh-ing.