Perennial Private to Public fund raises $200m
Perennial Value Management, long known only for its value stock-picking prowess, this week closed the third iteration of the Private to Public Opportunities Fund. The raising was fully subscribed, hitting the $200 million cap that was put in place to ensure maximum flexibility for the portfolio managers, including Ryan Sohn.
The fund is a unique proposition in a sector of the market that remains ripe for active management. It is a closed-end strategy, operating for five years, allowing the management team to deploy capital with patience and confidence.
The fund targets investments in both private and public markets, with up to 30 per cent to be invested in unlisted growth capital, or companies expected to IPO in one to two years’ time. Another 40 per cent will be allocated to pre-IPO companies that are expected to go to market within 12 months and finally, up to 50 per cent in announced IPO raisings and discounted placements.
Ultimately, the fund seeks to capitalise on Perennial’s competitive advantage, having operated in the sector for many years and built extensive relationships with key players across Australia. The recent raise takes the total assets under management under the Private to Public strategies to $500 million across the three funds, with the PPP 1 fund up close to 80 per cent since its launch around two years ago.
There has seemingly been a spike in demand for this type of approach, which some in the advisory sector are putting down to its private equity-like characteristics. Traditionally, private equity investments have been out of the reach of all but the most wealthy investors, requiring significant upfront investments, but also locking-up capital for as long as ten years. This is unpalatable for most investors.
Whilst not a traditional private equity strategy, the Perennial fund clearly offers some benefits of this approach in the form of accessing companies early in their growth cycle, and in many cases helping to guide them through this growth process. On the flipside, it delivers this in a more palatable way by targeting those companies that are likely to see liquidity events sooner rather than later.
Some of the fastest growing and most successful businesses have been part of the Perennial funds including Lumos Diagnostics, Gefen Technologies and Aroa Biosurgery.