La Trobe Private Credit Fund Launches Cost-Free Distribution Reinvestment Plan
La Trobe Financial Asset Management has launched a Distribution Reinvestment Plan (DRP) for its Private Credit Fund, offering unitholders a streamlined way to reinvest cash distributions into additional units without brokerage fees.
- Optional DRP allows reinvestment of cash distributions into new or transferred units
- Participation open to Australian and New Zealand unitholders, with eligibility criteria
- No brokerage, commission, or transaction costs for participants
- Responsible Entity retains discretion over unit issuance and participation approvals
- Plan includes provisions for variation, suspension, and termination
Introduction of the DRP
La Trobe Financial Asset Management Limited has formally introduced a Distribution Reinvestment Plan (DRP) for the La Trobe Private Credit Fund (ASX – LF1). This initiative enables eligible unitholders to reinvest their cash distributions automatically into additional units of the fund, enhancing capital growth potential without incurring brokerage or transaction fees.
Participation and Eligibility
The DRP is voluntary and primarily available to unitholders with registered addresses in Australia and New Zealand. Those who have not provided valid bank account details by the specified election date will be deemed to participate fully in the plan, reinvesting all cash distributions. The Responsible Entity reserves the right to refuse or limit participation to ensure compliance with legal and regulatory requirements, including foreign investment restrictions.
Operational Mechanics
Participants can elect either full or limited participation, allowing reinvestment across all or a portion of their units. The plan operates by applying distributions payable on participating units to acquire additional units at a price determined by the Responsible Entity, typically aligned with the unit’s net asset value. Units may be newly issued or transferred from existing holdings, with the Responsible Entity maintaining discretion over the method.
Flexibility and Control
Unitholders can vary or terminate their participation at any time, with changes effective from the next distribution record date. The Responsible Entity also holds the power to vary, suspend, or terminate the DRP, providing operational flexibility to respond to market or regulatory developments. Importantly, all administration costs are borne by the fund or Responsible Entity, ensuring participants face no direct costs.
Implications for Investors
By facilitating reinvestment without additional costs, the DRP offers a convenient mechanism for unitholders to compound their investment returns. However, the Responsible Entity’s discretionary powers and eligibility restrictions mean investors should carefully consider their participation and monitor any future amendments to the plan. The DRP’s introduction aligns with broader trends in asset management to provide cost-effective, automated reinvestment options.
Bottom Line?
The DRP launch marks a strategic step for La Trobe Private Credit Fund, but investor uptake and future adjustments will be key to watch.
Questions in the middle?
- What initial uptake rate will the DRP see among eligible unitholders?
- How might the Responsible Entity’s discretion impact investor participation over time?
- Will the DRP influence the fund’s liquidity and unit price in upcoming distribution cycles?