media release (23-092MR)

CVC Limited makes changes to TMD following ASIC stop order


ASIC made an interim stop order on 30 March 2023 preventing CVC Limited (CVC) from offering or distributing CVC Notes 2 because of deficiencies with the target market determination (TMD). The order was revoked on 4 April 2023 after CVC significantly narrowed the target market for CVC Notes 2 to address ASIC’s concerns.

CVC is listed on ASX and is primarily focussed on property investment. The offer of CVC Notes 2 seeks to raise $30,000,000 with the ability to raise more or less. The lead manager and arranger of the offer is E&P Corporate Advisory Pty Limited (AFSL 338885).

CVC Notes 2 are unsecured notes with a repayment date of 31 March 2026. They rank equally with other unsecured loans of CVC but behind all secured debt. Distributions to investors will be paid quarterly based on a floating rate comprised of a margin (4.75% p.a.) plus the 90-day BBSW. The distributions will not be franked and are not guaranteed. CVC Notes 2 are expected to be listed on ASX but are likely to be relatively illiquid. 

ASIC made the interim stop orders to protect retail investors from potentially acquiring an investment product that may not be suitable for their financial objectives, situation or needs. ASIC was concerned that the target market in the original TMD prepared by CVC was too broad for a higher risk unsecured debt product and defined the target market based on features that CVC Notes 2 does not provide.

CVC has made changes to the original TMD and more appropriately defined the target market to address ASIC’s concerns.

For example, the original TMD indicated that retail investors intending to use CVC Notes 2 as core component (25-75% of investable assets) were potentially in the target market. This has been reduced to 3% in the revised TMD.

The original TMD also indicated that retail investors with a ‘medium’ risk profile were potentially in the target market. These investors are now excluded from the target market.

The original TMD defined the target market based on features that CVC Notes 2 does not provide. For example, the original TMD indicated that retail investors needing to withdraw money frequently were in the target market despite CVC Notes 2 not providing redemption rights for approximately three years. It also indicated that retail investors seeking a capital preservation product were in the target market. CVC has revised the TMD to exclude these investors from the target market.

ASIC has told CVC and E&P Corporate Advisory to give retail investors an opportunity to withdraw their application for CVC Notes 2 because the original TMD was deficient.

ASIC reminds financial product issuers that under the design and distribution obligations (DDO), they must clearly define target markets for their products appropriately, having regard to the risks and features of their products. It is in distributors’ interests to help the issuer ensure the TMD is appropriate so that offer timetables are not disrupted. In this instance, CVC’s offer was delayed due to ASIC’s regulatory action.


DDO requires firms to design financial products that meet the needs of consumers, and to distribute those products in a more targeted manner. A TMD is an important requirement under DDO. It is a mandatory public document that sets out the class of consumers a financial product is likely to be appropriate for (target market) and matters relevant to the product’s distribution and review.

To date, ASIC has made 28 interim stop orders under the DDO due to deficient TMDs. Of these, 23 interim stop orders have been lifted following actions taken by the entities to address ASIC’s concerns or where the products were withdrawn, and five remain in place.

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