Blue Sky confirms KPMG to carry out comprehensive review
Written on the 6 June 2018 by Ben Hall
Blue Sky Alternative Investments (ASX: BLA) has announced it is undergoing an independent valuation review of all assets by KPMG, a day after its shares took another hit on the news that it is winding up its retail domestic hedge fund.
Blue Sky says KPMG is not advising Blue Sky on its business model or management structure and the review is part of a comprehensive review process announced last month.
Shares in Blue Sky fell 6.5 per cent to close at $2.31 on Tuesday after the fund manager announced it would wind up its retail domestic hedge fund, One Managed Investment Funds Limited, which is the responsible entity of the Blue Sky Alliance Fund. Proceeds will be returned to investors.
The company says the Alliance Fund comprised $48.6 million of fee-earning assets under management at March 31, 2018, representing less than 1.5 per cent of Blue Sky's total fee earning assets under management (FEAUM) at that date.
Blue Sky's hedge fund business will now focus solely on its institutional Dynamic Macro strategy, which has returned 6.88 per cent annually since inception.
The Brisbane-based company's share price and market capitalisation has collapsed since the release of a scathing report in March by a US short seller which claimed it "wildly exaggerated" its FEAUM.
Glaucus Research claimed that Blue Sky's $4 billion in FEAUM was overstated by $2.5billion and that its share price was worth just $2.56. At the time of controversial report, BLA shares were trading around $11.50 and had previously reached a high of $14.99.
As the share price plunged, the fallout led to two board purges and the resignations of managing director Robert Shand, followed by chairman John Kain, along with board members Elaine Stead and Nicholas Dignam.
Veteran board member Michael Gordon resigned for health reasons.
Last month the company announced it expects its full year net profit after tax (NPAT) for 2018 to be lowered by $7 million just a week after it abandoned guidance because of the turmoil caused by the Glaucus report.
At around 11am, BLA shares rose slightly to $2.33.
Business News Australia
Author: Ben Hall