The award-winning Perennial Value Small & Microcap team*, led by Andrew Smith is releasing a new strategy – the Perennial Private to Public Opportunities Fund (Fund), exclusively available to Wholesale Investors.
The new Fund’s objective is to generate superior, absolute returns, above a hurdle rate, from an actively managed portfolio of typically 30-45 unlisted growth capital, pre-IPO investments, IPOs and placements over a five-year period.
The Fund will be managed by the seven-person Perennial Value Small Cap team, led by Head of Smaller Companies and Microcaps Andrew Smith with Ryan Sohn a co-portfolio manager.
“Based on our observations in the small and microcaps sector, we have identified a gap in the market and there are tremendous opportunities to invest in companies requiring growth capital,” said Mr Smith.
The Fund will target companies that meet a range of critical investment criteria (including quality management, scarcity, scalable business model with growth potential, and valuation discount). The universe of unlisted companies meeting this criteria are typically hard to access for most investors.
Perennial Value Managing Director John Murray said strong opportunities exist for wholesale investors seeking value in the pre-IPO sector, citing the scale and strong network of the firm.
“The Perennial Private to Public Opportunities Fund offers investors access to capture upside potential of companies early in their growth cycle, whilst avoiding early stage risk associated with seed and venture capital,” said Mr Murray.
The launch of the new Fund follows the success of the Perennial Value Microcap Opportunities Trust, which has delivered 67.2%** cumulative return since inception (February 2017) net of fees to investors and is soft closing (closing to new investors) at the end of June as it reaches the targeted $150M capacity. This capacity limit was set so the team can continue to be a nimble investor in the microcap space.
“We have been pleased with the strong demand for our Microcap Opportunities Trust and it serves to affirm that there are great opportunities for investors in the microcaps universe as brokers find it increasingly difficult to research the growing sector,” said Mr Smith.
“Over recent years we have begun to also deliver impressive returns in the under-researched and difficult to access sector of pre-IPO opportunities/unlisted growth companies – hence our desire to establish this new fund,” he said.
Morgan Stanley Wealth Management has completed due diligence and is partnering with Perennial on the launch of the Perennial Private to Public Opportunities Fund.
Head of Product for Morgan Stanley, Shaun Bornstein says, “We would expect to give a firm commitment of AUD$25 million plus once the documents are finalised. We continue to have a longstanding relationship with Perennial and have confidence in Andrew Smith and his team to continue to deliver alpha throughout any market cycle.”
“The Perennial Private to Public Opportunities Fund is innovative with multiple sources of alpha and has a 5-year lockup period which is consistent with the objectives of the Fund. The team has a proven track record of successfully negotiating deals and driving a private to public premium,” said Mr Bornstein.
The minimum investment for the Perennial Value Private to Public fund is $100,000.
*Perennial Value’s Small Caps team recently won the Australian small cap equities category in the 2019 Money Management – Lonsec Fund Manager of the Year Awards for the Microcap Opportunities Trust
**As at 30th April 2019