Rising Interest Rates and Market Risks Loom Over Gryphon Capital Income Trust’s Growth
Gryphon Capital Income Trust (ASX, GCI) reported a robust fiscal 2025 with a 41.65% jump in revenue and a substantial capital raise to expand its RMBS/ABS portfolio. The Trust’s net assets topped $1 billion, reflecting strong investor confidence and strategic growth.
- Revenue increased 41.65% to $76 million in FY25
- Profit rose 40.75% to $68.8 million
- Capital raised totaled approximately $377.5 million through entitlement and wholesale offers
- Units on issue grew to 524.3 million, boosting net assets to $1.05 billion
- Monthly distributions paid totaled 16.44 cents per unit
Strong Financial Performance
Gryphon Capital Income Trust (GCI) has delivered a standout financial year ending 30 June 2025, with revenue climbing 41.65% to $76 million and profit increasing by 40.75% to $68.8 million. This performance underscores the Trust’s effective investment strategy focused on Australian residential mortgage-backed securities (RMBS) and asset-backed securities (ABS).
Significant Capital Raises Fuel Growth
The Trust successfully raised approximately $377.5 million during the year through a series of entitlement offers and wholesale shortfall placements. These capital injections, completed in November 2024 and April 2025, were driven by strong investor demand and a robust pipeline of investment opportunities. The additional scale aims to diversify the portfolio further, enhance liquidity for unitholders, and reduce operating costs on a per-unit basis.
Expanding Investor Base and Asset Growth
Units on issue surged from 335.6 million to 524.3 million, reflecting the capital raises and investor appetite. Correspondingly, net assets attributable to unitholders increased to $1.052 billion, up from $673.9 million the previous year. This growth positions GCI as a significant player in the RMBS/ABS market, with a portfolio valued at over $1 billion.
Distributions and Investor Returns
Throughout FY25, GCI maintained consistent monthly distributions totaling 16.44 cents per unit, amounting to over $68 million paid or declared. An additional distribution of 1.33 cents per unit was approved and paid in August 2025, demonstrating the Trust’s commitment to delivering steady income streams to investors despite market fluctuations.
Governance and Risk Management
The Trust continues to be managed by One Managed Investment Funds Limited, with investment decisions executed by Gryphon Capital Investments Pty Ltd, a Barings company. The auditor, PricewaterhouseCoopers, issued an unqualified opinion, affirming the fair valuation of assets and compliance with accounting standards. The Trust’s portfolio remains diversified across investment-grade and non-investment-grade RMBS and ABS, with rigorous credit risk management and stress testing to safeguard investor capital.
Outlook
While the Trust does not provide explicit forward-looking guidance, it remains focused on managing its portfolio in line with its investment objectives and market conditions. The recent capital raises and strong financial results suggest GCI is well-positioned to capitalize on opportunities in the Australian fixed income market, though investors should remain mindful of interest rate and market risks inherent in RMBS and ABS investments.
Bottom Line?
GCI’s robust capital raising and strong FY25 results set the stage for continued growth amid evolving market conditions.
Questions in the middle?
- How will rising interest rates impact GCI’s RMBS/ABS portfolio performance going forward?
- What strategies will the Trust employ to sustain or grow distributions amid market volatility?
- Could further capital raises dilute unit value or enhance long-term returns for existing unitholders?
