Blue Sky Alternative Investments Limited (ASX: BLA) (‘Blue Sky’) advises that it has reviewed in detail the opinion piece published last week by Glaucus Research Group (GRG). Blue Sky categorically rejects GRG’s allegations as incorrect and misleading.
Blue Sky reconfirms that its fee-earning assets under management (‘AUM’) exceed $4.0 billion and that it has generated returns of 15% p.a. (net of fees since inception.)
Blue Sky has attracted the support of 20 institutional investors, as well as a wide range of sophisticated and retail investors. Blue Sky has a skilled investment team, a robust balance sheet, and is well placed to capture the growth in private markets and alternatives - Australia’s fastest growing asset class.
A summary of Blue Sky’s detailed response is below:
Blue Sky categorically rejects allegations with respect to calculation of Blue Sky’s fee-earning AUM
- The calculation of Blue Sky’s fee-earning AUM is in line with common reporting practices, and they have been consistently disclosed, applied and reported ever since we listed. Specifically, in its Private Real Estate business, Blue Sky includes debt and equity and therefore reports the gross realisable value in fee-earning assets under management. This approach is entirely consistent with market practice in Australia.
- Blue Sky confirms that it is mandated to manage funds invested by joint venture partners Goldman Sachs and SC Capital, and that these funds are part of Blue Sky’s overall fee-earning AUM.
- Blue Sky confirms that all of its 20 institutional mandates have invested into funds that Blue Sky manages and from which it earns fees.
Blue Sky categorically rejects allegations with respect to Blue Sky’s asset valuation processes
- Blue Sky adopts the highest industry standards and practices with respect to valuations. Independent verifications are based on the same approach used by other leading global alternative asset managers. The valuation in each asset class is reviewed by top-tier independent experts. They include KPMG, Colliers International, CBRE, JLL, Elders Rural Services, Savills and Herron Todd White, together with five independent directors of two ASX listed companies (ASX: BLA and ASX: BAF).
- Blue Sky’s valuation processes can be found in its 1H FY18 results presentation here Blue Sky categorically rejects allegations with respect to Blue Sky’s fee structure.
- For its closed ended funds, Blue Sky typically charges a mix of fees, some of which (such as due diligence fees) are charged at the start of a fund, some of which (such as annual investment management fees,) are charged over the life of a fund, and some of which (such as performance fees) are paid at the conclusion of a fund.
Blue Sky confirms that it has filed a complaint about GRG’s conduct with the Australian Securities Investment Commission
- Blue Sky has formally invited ASIC to investigate GRG and the short selling of Blue Sky securities in recent months. Blue Sky has offered full assistance to ASIC and complete access to relevant materials relating to all matters referred to in the opinion piece.
Blue Sky’s detailed response to GRG’s allegations was released by the ASX today
Blue Sky’s Managing Director, Robert Shand, said: “Blue Sky categorically rejects the allegations made by GRG which are both fundamentally flawed and materially misleading. Blue Sky confirms that it manages in excess of $4bn in fee-earning AUM, has a strong track record of delivery of 15% per annum since inception (net of fees), has a robust balance sheet and is in the best position to capture the long- term opportunities of the alternative investment market.
“The calculation of Blue Sky’s fee-earning AUM, which is in excess of $4bn, is entirely in line with market practice in Australia and Blue Sky has adopted the same approach since it listed. Blue Sky confirms that its approach is consistent with industry practices in Australia and the approach taken by a broad range of other ASX listed businesses.
“Blue Sky confirms that it has 20 domestic and international institutional investors, including First State Super, Goldman Sachs, and PSP Investments.
“Blue Sky confirms its track record of 15% p.a. net of fees since inception and that we have attracted growing support from a wide range of investors because of this strong performance. We are also the first to admit that our track record is not perfect. We manage 80 funds and a small portion of these are not performing in line with our expectations. This is obviously no different to investing in a portfolio of 80 stocks: it is simply not possible for all investments to perform well all of the time which is the reality of investing.”
“Blue Sky has always adopted the highest industry standards and practices with respect to valuations. Independent verifications are based on the same approach used by other leading global alternative asset managers. The valuation in each asset class is reviewed by multiple top-tier independent experts: KPMG; Colliers International; CBRE; JLL; Elders; Herron Todd White; amongst others. This process is then followed by a review by five independent directors of BLA and BAF.
“Blue Sky’s performance and management fees are entirely consistent with market practice in Australia. These fees are fair, both with respect to their quantum and the way they are structured. They are fully and fairly disclosed.
“Blue Sky’s strong financial performance has been audited by EY each year since our listing, and at no point since our listing have we received anything other than an unqualified audit opinion,” Robert Shand concluded.
A more detailed response can be viewed on the ASX. Click here for more detail