Blue Sky Alternative Investments (ASX:BLA) discusses 1H17 results and growth


by Carolyn Herbert

Blue Sky Alternative Investments Limited (ASX:BLA) Managing Director, Robert Shand talks about investment performance and growth in alternatives.

Blue Sky Alternative Investments Limited (ASX:BLA) is Australia’s leading diversified alternative asset manager. What’s that mean? That means that we invest across the four major alternative asset classes - private equity, private real estate, real assets where we’re focused on water entitlements and agriculture, and hedge funds. We’ve got a market cap north of $500 million today, a team of over 90 people and offices in Brisbane, Sydney, Melbourne, Adelaide and New York.

The key highlight of first half results was just simply the growth. At 31 December, we managed $2.7 billion in assets under management. And that was up $1 billion, over the prior 12 months. Now it took us nine years as a business to go from zero, as a start up, to $1 billion under management. We added $1 billion over the prior 12 months that led up to 31 December. And that translated through to the financials of our business. So revenue was up over 50 per cent NPAT for the half and doubled on the prior corresponding period. Operating cash flow was really strong, $9.3 million. The other thing I would say about the first half results, were the returns continued to be very strong. 16.4 per cent net of fees since inception across our funds.

We had very solid performance across all four of our asset classes. So that was really pleasing, not relying on any one particular part of the business. But focus continues to be to grow the business. We’ve said publicly that we’ll be at between $3.1 billion and $3.3 billion in assets under management, by 30 June 17. We’ve said that we’ll be at $5 billion by the end of FY19. And if you think about that in the context of what’s happening in our industry, Australia’s got an enormous funds management industry. It’s $2.7 trillion if you include the overseas money that’s invested here. And alternatives are the fastest growing part of the industry, and we’re ideally positioned to capture that growth.

As a team, we absolutely invest in everything that we do. I personally don’t have a single investment outside of Blue Sky, all of my investments are tied up with Blue Sky and that’s the same across our entire senior team. We’re all about alignment.
So we’ve delivered for our investors in our funds, 16.4 per cent per annum returns net of fees. That’s since inception back over 10 years ago.

Alternative investments as an industry is growing very, very strongly. Back two decades ago, alternative investments were virtually unheard of. It’s about five per cent of the overall industry. That’s grown over the last two decades to a point where it’s now 20 per cent on average, of peoples’ portfolios. You’ve got groups like the Future Fund investing 39 per cent of their portfolio in alternative assets. So there’s an enormous growth opportunity across both institutional investors, but also for high net worth individuals, family offices. Even retail investors should have a portion of their portfolio allocated to alternatives.

So we’ve said publicly we’ll hit underlying NPAT of $24 million to $26 million, for the full year. And we’ll be at $3.1 billion to $3.3 billion in assets under management, by 30 June. That’s up from $2.1 billion at 30 June last year. So very strong growth across the business, we’ve said longer term, we’ll be at $5 billion across the four asset classes that we currently manage. And anything extra that we do will be connected to that.