One of our largest positions is Bravura, which is also a newly disclosed holding. This is a company that we have followed for a long time, in fact we met with the management team five times over two and a half years before investing. The company was listed by private equity in November 2016 -- ironically the same week the Fund launched -- and while we are attracted to this type of enterprise software business, we watched patiently, and cautiously, from the sidelines to see how the 47% stake held by private equity played out.

Bravura is a leading provider of software to the wealth management and fund administration industries primarily in Australia, New Zealand, South Africa and the United Kingdom serving a suite of top-tier clients, including: Fidelity International, Bank of New York Mellon, JPMorgan, Prudential, Mercer, Westpac NZ, and Citi, among many other notables.

The company’s new generation Sonata product is pivotal to the company’s long-term growth. Sonata has an open-architecture structure which allows all customer-requested enhancements to be written into the primary code base, and then made available to all customers on a regular -- usually monthly -- basis. This means the Sonata code base is constantly enriched and remains relevant to their customer’s needs.

Bravura’s software is mission critical and customers usually sign up for 10 to 15-year contracts with CPI escalation. In addition to this, roughly half of Sonata contracts also include a volume- related element. The mission critical nature of the products also means customers are slow to change, the sales cycles and implementations are long, and as a result revenue can be lumpy from year to year. The business is delivering mid-teens revenue growth and, thanks to strong operating leverage, we expect the business to generate very healthy earnings growth over the medium- to long-term.

The company was in the headlines over the past 12 months as a potential buyer of ASX-listed, and previous Fund holding, GBST. Bravura raised $165 million in anticipation of a transaction, which in our view fortunately did not proceed. Bravura remains very well capitalised as a result with around $120 million in net cash even after two smaller, recent, and -- we think -- more sensible acquisitions. These purchases add further growth atop an already growing core business with high levels of recurring revenue, and a strong balance to continue investing and growing in the years ahead. 

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