At Ark Capital, we have always been cognisant of the importance of disclosure and transparency to our investors, and we strive to ensure that what we do can be regarded as best practice. Our commitment to these principles is reflected in how we approach the key areas highlighted by the report:

Fee Transparency: We provide full disclosure of all fees earned by the manager. Our investors deserve complete visibility of the total remuneration structure—no hidden costs, no opaque arrangements.

Conflicts Management: We maintain rigorous disclosure of all conflicts of interest, whether actual or potential. We have a clearly defined governance structure that reviews and identifies conflicts and oversees management procedures to ensure they are appropriately managed. Notably, we actively encourage staff and director investment in our products and funds. While this creates potential conflicts that require careful management, we believe co-investment fundamentally aligns the interests of our team with those of our investors—we succeed when our investors succeed.

The report’s observations regarding valuations are both valid and relevant, though they require careful consideration within the context of specific lending segments.

For construction lending in particular, current valuation practices are based on long-established principles that have been used by banks and non-bank lenders for decades. These methodologies have evolved to reflect the unique characteristics of development finance, where traditional quarterly valuations may not always capture the true economic position of an asset under construction.

That said, we recognise the regulator’s call for enhanced standards and the importance of adapting to evolving industry expectations.

In response to the findings in the independent report, Ark Capital is undertaking a comprehensive review of our current valuation approach. This includes:

• Examining our existing processes for regular independent valuations of projects
• Assessing how we can enhance our practices to better reflect evolving standards
• Considering the implementation of quarterly portfolio valuations to provide greater transparency and more frequent updates to investors

We believe this proactive approach will further strengthen investor confidence while maintaining the rigorous risk management standards our investors expect.

ASIC’s report makes clear that “enhanced standards are needed to lift practices across the sector.” We support this call to action and are committed to working constructively with the regulator and industry bodies like the PFA to ensure Australia’s private credit sector continues to grow sustainably while maintaining the highest standards of investor protection.

As the industry evolves, Ark Capital remains focused on our core principles: transparency, rigorous governance, and putting our investors’ interests first. We look forward to the additional guidance ASIC has indicated will be released in November and will continue to engage actively with regulatory developments in this space.