Private credit funds that financed Ross Garnaut’s Zen Energy have begun writing down their positions, revealing that lenders foresaw the renewable energy company’s collapse at least six months in advance.
Longreach, a key portfolio manager, made two separate provisions to the valuation of Zen’s debt, explicitly warning investors that voluntary administration was a likely outcome.
The early write-downs suggest that while the public market may have been caught off guard by the final collapse, sophisticated private lenders had already priced in the failure of the business model.
The revelation adds a concrete data point to the growing scrutiny of the private credit asset class.
While major institutional investors have continued to deploy billions into private credit funds, defying a wave of redemptions and regulatory concerns, cases like Zen Energy demonstrate the risks inherent in illiquid lending.
The disconnect between the early provisioning by Longreach and the eventual public collapse underscores the opacity that often characterizes these markets, where valuation adjustments can lag behind fundamental deterioration.