Private equity fund open to retail trade
Macquarie Investment Management is to open up its private equity fund of funds MAIT (Macquarie Alternative Investment Trust) to retail in-vestors for the first time in early September.
Macquarie Investment Management is to open up its private equity fund of funds MAIT (Macquarie Alternative Investment Trust) to retail in-vestors for the first time in early September.
The move will allow investors to spread the risk of venture capital investment over a number of fund managers as well as a broader scope of companies.
The launch follows the successful retail offer of Macquarie Direct Investment's MIT III institutional fund in March this year. MIT III, which channelled both retail and wholesale funds through Macquarie Direct Investment, set out to raise $50 million through retail inves-tors but attracted $90 million from private investors.
Sam Armstrong, divisional director of Macquarie Investment Manage-ment's institutional funds division, says MAIT's pool of nine differ-ent funds, which have invested in 64 different private unlisted com-panies, will attract investors looking to spread risk.
"There was extremely strong interest from DIY super funds in MIT III and we think the same people will be attracted to MAIT," he says.
Like MIT III, the minimum investment will be $30,000, fees of 1.25 per cent are applicable, and the product is targeted at high net worth individuals with portfolios of $300,000-plus. The fund is self-liquidating, with capital returned to investors as and when busi-nesses in the portfolio are sold, a process estimated to take about 10 years. The offer will close in December.
Initial payments of $15,000 are required, with MIM planning to recoup the balance over a three to five year period.
"Typically, we'll be looking for two annual payments, but it could be as much as four per year. We'll call the money as and when the fund managers need it," says product manager John Wills.
Armstrong says MAIT is currently returning 9 per cent per year, but many of the companies in the portfolio are "conservatively valued" and the 23 companies which have realised their assets have shown an average return of 60 per cent and a median of 40 per cent.
"There's a lot of latent value in the fund. The typical pay-off path shows a j-curve, with strong back-ended performances," he says.
Macquarie is looking to raise $30 million from retail investors and a further $30 million through wholesale. This will take MAIT, which currently stands at $70 million from wholesale investors, to its end-target of $130 million. Once it has reached its cap, MIM will open a new fund from scratch.
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