Centuria Capital's Private Credit Scare Has Split Managers Between Exits and Bargain Hunting

Exposure to a collapsed developer, a capital raise for an AI compute business and a flat outlook have pushed the property fund manager to record lows against book value, and managers disagree on whether the reaction is overdone.

30 Sep 2026 · 3 min read

A private credit scare and a data centre bet

Few ASX financials have had a rougher few months than Centuria Capital. Ellerston Capital reported the stock fell 34 per cent over the September quarter after an FY27 outlook with zero forecast organic growth, against market expectations of mid-single digit growth. That capped a period that also included a $300 million equity raise and exposure to collapsed developer Bathla Group through the group's private credit funds. The question now dividing fund managers is whether the market has priced in too much bad news.

Cromwell Funds Management, which is overweight, believes it has. In its September quarterly, Cromwell said “we believe the current CNI share price reflects an unrealistically weak outlook for the rest of CNI's business” and added to its position. Wilson Asset Management and Pengana Capital Group took the opposite path, exiting in July.

We believe the current CNI share price reflects an unrealistically weak outlook for the rest of CNI's business.

— Cromwell Funds Management, Quarterly Report, September 2026

Sizing the Bathla exposure

The central concern is credit. Pendal Group reported in July that Centuria confirmed six loan facilities to Bathla held within its CBCF private credit vehicle, totalling $280 million, or around 11 per cent of private credit AUM, though the exposure sits predominantly within managed funds, with only $4.5 million of direct lending exposure. All loans were accruing interest and secured by first mortgages. Cromwell added that four of the loans are tied to residual stock and land, and that the largest exposure, an apartment project in Rouse Hill, received an occupation certificate in late September and can begin settlement subject to title issuance.

The bulls argue the reaction is out of proportion. Bell Asset Management said the market capitalisation loss of more than 20 per cent stemmed from a problematic loan in a division accounting for around 15 per cent of group earnings, concluding: “To us, this appears to be an overreaction by the market.” Ellerston believes there is a good chance Centuria can recoup the vast majority, if not all, of its Bathla exposure over the next six months. Cromwell noted a critical SQM Research report on the Centuria Bass Credit Fund, while pointing out that ASIC has taken enforcement action against SQM over its reports on the collapsed Shield Master Fund.

To us, this appears to be an overreaction by the market.

— Bell Asset Management, Monthly Report, July 2026

The sellers focus on reputation. Pengana said it exited given the potential for the Bathla exposure to weigh on Centuria's reputation and its ability to grow funds under management. Wilson cited weak sentiment after the capital raise, growing scrutiny of credit risk in private credit and broader caution around lending to unlisted property developers facing rising construction costs and limited pre-sales.

Reset Data and the AI option

The other half of the story is Reset Data, the 50 per cent owned Australian neocloud provider. SG Hiscock & Company described it in May as one of only three NVIDIA-certified cloud partners in Australia and said it believes the asset is materially underappreciated relative to peers. Pendal said the $300 million raise would initially reduce debt and fund an investment in the World Square office syndicate, then be deployed over time to expand Reset Data and support private credit growth, with AI Factory GPU opportunities of 3MW, 7MW and 13MW and potential initial revenue from FY27 to FY28. Ellerston expects Reset Data customer contracts to come.

What managers are watching next

Managers will watch settlements on the Bathla projects, particularly Rouse Hill, any impairments in the private credit funds, Reset Data contract announcements and whether fund flows hold up. With the stock at what Ellerston describes as its lowest price to book value, holders such as Ellerston and Cromwell are betting that resolution on Bathla and progress at Reset Data will close the gap, while the exits from Wilson and Pengana show how much confidence the credit scare has cost.