Blue Sky writes down investment in Shoes of Prey following reports of financial troubles

BELEAGUERED Brisbane-based funds manager Blue Sky has received another kick while it’s down as money troubles hit one of its funds – a well-known Queensland shoe retailer.

Two of the co-founders of Shoes of Prey, Jodie Fox and Michael. Picture: John Appleyard

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MONEY problems with online-shoe seller Shoes of Prey have hammered home more pain for beleaguered Brisbane-based funds manager Blue Sky.

Blue Sky’s stockmarket-listed fund on Monday revealed it had taken a “significant reduction” in further writing down the value of its investment in Brisbane-based Shoes of Prey.

“Difficulty in raising additional financing for this venture capital investee company, together with increased concern over its liquidity profile, had led to a significant reduction”, the Blue Sky Alternatives Access Fund said.

That additional hit comes only one month after Blue Sky, amid widespread scrutiny, had valuers assess a portfolio of investments and take a 12 per cent axe to the value of Shoes of Prey.

The extent of the latest writedown was not listed but the fund’s venture capital assets reduced by almost $1 million to $13.11 million in the past month.

Shoes of Prey sells footwear from loafers to high heels, offering women ways to customise shoes and pledging to make items on order so stock is never a problem.

But it has been stumbling and, according to Blue Sky documentation, focused on a revised business plan. Shoes of Prey had in June looked at raising “additional financing”, Blue Sky said.

Shoes of Prey, which lists NAB as its banker on company searches, has been contacted for comment. Sources with knowledge of the situation said Shoes of Prey has been looking at financing or a sale, and was considering any third-party interest in its business and brands.

While the Shoes of Prey downgrade hit Blue Sky’s fund, the positive news for fund investors was an upgrade on a New York property project. Blue Sky did not detail how much of an “small uplift” was given to the 441 Ninth Avenue Trust, but said construction of the building was progressing.

Only a month earlier, Blue Sky’s fund bit the bullet with properties in Brisbane after valuations.

A 107-apartment Flora Street project in Greenslopes suffered a 48 per cent cut to value. Then an East Brisbane project for 146 rooms – funded via two “Wellington Road” trusts – was sliced in value by 9 per cent.

“The project has been delayed in response to an increase in supply of new apartments in the area,” the fund said. The latest aim for the project, which should have already been paying back money to investors, was to launch a sales campaign in fiscal 2019’s first half.

Blue Sky has seen the share price on its main stockmarket entity, Blue Sky Alternatives Investments, hammered from $11.43 in March after a short-seller accused the fund manager of overstating performance of investments. It closed down 8.5 cents at $1.905 on Monday.

Blue Sky rejected the short-seller’s allegations but later revealed some investments have performed worse than expected, such as its student accommodation ventures. The fund manager also warned it will post an “underlying” loss of almost $25 million for fiscal 2018.

The fund’s stock closed up 2 cents at 90 cents on Monday.