Blue Sky’s Rob Shand resigns as managing director, in bid to restore market confidence in firm

THE young boss of Blue Sky has departed, saying his resignation was needed to help rebuild confidence in the embattled Brisbane-based fund manager.

Rob Shand has quit as managing director of Blue Sky Alternative Investments. Pic: Lyndon Mechielsen

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THE young managing director of Blue Sky Alternative Investments has departed, saying his resignation was needed to help rebuild confidence in the embattled Brisbane-based fund manager.

The departure of Robert Shand, 36, comes after the share price of Blue Sky dropped by more than two thirds in the past month following questions about disclosure and performance at the business, which oversees funds with assets from childcare to a burrito chain.

Company documents indicate he is entitled to six months’ pay, or $238,750, among entitlements, and is restrained from working for a rival outfit for half a year. He has also lost 1.3 million stock options in Blue Sky — they are actually not of value at the company’s current share price of $3.10, which was down 36c.

Those options had been worth almost $4.8 million when shares were trading at $11.43 last month. But a share-price caning followed California-based short-seller Glaucus releasing research in late March that accused Blue Sky of inflating assets and manipulating performance.

“Shand’s resignation was inevitable,” Glaucus head of research Soren Aandahl said on Monday.

Blue Sky had denied Glaucus’s claims. But by last week, Blue Sky issued a profit warning and offered more disclosure. At a conference call last week, Blue Sky chairman John Kain had offered his support for management.

On Monday, Mr Kain told The Courier-Mail: “The board discussed with Rob over the weekend what needed to happen for that sort of reset of the business, and improvement in things that we were doing. We mutually agreed that that would be in the best interests of the company and the shareholders for that to occur.”

Mr Kain said the feedback from shareholders was not for a change in MD. “We’d spoken extensively to shareholders. And this was driven by Rob and the board, it wasn’t driven by shareholders,” Mr Kain said.

Mr Kain played a straight bat to questions about whether he would need to resign himself, saying the chairman position was up to the board.

Mr Shand’s interim replacement is Kim Morison, who joined Blue Sky in 2010 and oversees its division managing investments in water and farming ventures. Mr Kain said Blue Sky would consider internal and external candidates for a permanent replacement.

Kim Morison. Pic: Liam Kidston.

Mr Morison said the business had strong fundamentals and he would look at rebuilding confidence in the business and continuing transparency moves.

He also flagged a focus on Blue Sky, which has faced queries about its reliance on upfront fees, to building up recurring cash flows.

That included securing long-term mandates “that do generate consistent cash earnings and … have a close correlation to our expense base at the same time”, Mr Morison told The Courier-Mail.

“That will mean that we’re far more sustainable as a business, when market conditions, as we know, there will be times when they turn against us.

“We have times that people won’t be necessarily be keen to allocate capital to new investments — we want to ensure that (the) business has a long, long track record to play out, by making sure we’re not at pressure over the difference between our income and our cost base”.

Mr Shand also started at Blue Sky in 2010 and was its chief operating officer. Mr Kain said Mr Shand had worked tirelessly and helped build up Blue Sky’s scale.

The former MD leaves with 220,000 shares and 37,500 options, which can be converted into stock if he pays $2.57. He also had a $4,000 loan with Blue Sky at the end of last financial year that is used to invest in the company’s funds.

He told The Courier-Mail last week that he also had investments in Blue Sky’s listed fund, and its private-equity, venture capital, hedge fund, property and water assets.

“The investors like to see it,” he said.

His family home in Brisbane’s Pullenvale has been up for sale for $1.5 million since mid last month, and he controversially bought an apartment last financial year in a Blue Sky project that the company decided did not have to be declared as a related-party deal.

In another shake-up, executive directors Elaine Stead and Nicholas Dignam are stepping down from the board but will stay as executives with Blue Sky. The company is looking at increasing the number of independent directors — of six board members now, three are executives.