BLUE SKY RIDES ALTERNATIVE GROWTH
Written on the 29 August 2014 by Karen Rickert
CONSISTENCY is key for Blue Sky Alternative Investments (ASX:BLA) with the asset manager posting a 60 per cent lift in full-year profit to $6.24 million.
The result was built on a 69 per cent surge in revenue to $24 million for the 12 months to the end of June.
Earnings before interest, tax, depreciation and amortisation increased from $1.2 million in FY13 to $5.17 million.
Assets under management (AUM) doubled to more than $700 million in the last year, following strong deal flow activity and increased demand from private investors.
Founder and managing director Mark Sowerby (pictured) says the results affirm the company’s consistent growth pattern.
“We’ve been going for eight years with this theme of increasing allocations to alternatives in Australia,” Sowerby says.
“In the last six months we have started to see that broader acceptance in allocations to alternatives.
“When people start to look for managers who have got a really good track record of experience, then it’s a pretty short list in Australia.
“It’s been hard work, but I think we’re going to see the fruits of our labour over the next few years.”
Sowerby says the growth is a result of “mainstreaming” alternative assets as an increasingly popular choice for investors.
Based on Rainmaker researcher, he says allocations have risen from 5 per cent in 1997 to more than 17 per cent today.
It’s a promising sign for Blue Sky, with the company’s offshore counterparts reporting alternative allocations of up to 50 per cent.
“Alternatives are not really a niche anymore. They’re sort of a foundation part of every portfolio and, if they’re not, they will be.
“Essentially they offer access to unlisted investment opportunities that aren’t different in many respects to what’s on the stock market.
“Other developed nations already have significant allocations to alternatives, while Australia has a very sophisticated superannuation and investment industry.
“As our investment thinking matures, it’s inevitable that more and more of that money will go to alternatives.”
Blue Sky’s confidence in the sector is clear, following the launch of the Blue Sky Alternatives Access Fund (ASX:BAF) in June.
The company raised $60 million to deploy across diversified Blue Sky funds, after listing on the Australian Stock Exchange.
Sowerby says the value of the fund will become more evident to investors in the long-term.
“We’ve allocated nearly three quarters of the money already to investments, so it’s already working for people and not sitting there as cash doing nothing.
“I think we’ll get more of a guide on how those investments will play out in the next 12 to 24 months.”
Looking ahead, Blue Sky will target $1 billion in AUM during FY15 - a “significant” number in the scope of alternatives.
“Through the course of the year we’ll certainly realise investments, particularly in private equity and private real estate, which will come off our AUM number naturally.
“But nevertheless we still expect to reach $1 billion in the next 12 months and, all things being equal, keep growing as well,” Sowerby says.
BLA will pay a fully franked dividend of 7c a share on October 3.