Tekne Capital Management readies Australia push, Gresham on deck

Top SOHN technology stockpicker Beeneet Kothari’s firm is heading Down Under, by seeking a foothold in the Australian market.

Tekne’s Beeneet Kothari is said to be working on an Australian investment fund option.

High-profile global technology stockpicker Beeneet Kothari is seeking a foothold in the Australian market, through a new partnership with advisory and funds management firm Gresham.

The Australian understands Mr Kothari’s firm Tekne Capital Management, which is based in New York and focuses on investing across technology, media, digital consumer, payments, and telecommunications businesses globally, is quietly working with Gresham on setting up an Australian dollar fund.

Sources said it would be structured as a unit trust and feed into Tekne’s US dollar main investment vehicles, which predominantly scour markets outside the US for high-growth technology, media and telecommunications companies.

Tekne — which already counts several wealthy Australian families among its clients — manages about $US1.5bn ($1.9bn) globally and the local feeder fund is expected to raise in the order of $200m. Earlier reports have cited billionaire George Soros, former hedge fund manager Stanley Druckenmiller and the Rothschild family as Tekne backers.

Tekne and Gresham declined to comment on their Australian fund plans.

Still, Mr Kothari has caused a stir locally in the past three years, given his bumper stock picks at the SOHN Hearts & Minds Investment Conference. That is despite no data being publicly available on Tekne’s website to substantiate the firm’s performance.

Last year’s highlighted stock by Mr Kothari at the conference was Hong Kong-listed payments technology group Yeahka, which has seen its shares soar more than 152 per cent so far this year.

According to Mr Kothari at the time, the power of Yeahka is that it pulls in the payments across China then packages and resells the lucrative collected data back to the same merchants using the system.

He said: “We believe this stock can double or triple from here.”

Mr Kothari outlined Yeahka’s attractiveness in terms of high barriers to entry and that management had skin in the game, aligning with the interests of investors.

There have, however, been growing concerns globally in 2021 about a potential bubble in technology stocks.

Analysing the US market, founder of hedge fund giant Bridgewater Associates Ray Dalio this week said about 5 per cent of the top 1,000 US companies were priced at unsustainable levels.

He put his overall “bubble gauge” for the US stockmarket around the 77th percentile, compared to 100th percentile readings that occurred in the bubbles seen in 2000 and 1929.

Regulators — including those in Australia — are also clamping down on tech giants such as Google and Facebook that have a stranglehold in their respective markets.

The lion’s share of Tekne’s funds under management are invested outside the US, given the firm has strong views on the fact the US accounts for 16 per cent of global economic output and 4 per cent of the world’s population — but is overrepresented at about 85 per cent of the technology, media and telecommunications market capitalisation.

Other stocks highlighted by Mr Kothari at the SOHN conference in prior years have included Brazilian payment-based e-commerce service PagSeguro and China data centre group GDS Holdings.

Sources said Tekne and Gresham were structuring the local feeder fund as a unit trust for wholesale Australian investors, in part to ensure a more favourable tax structure. Australian investors and fund managers have increasingly boosted their holdings of overseas shares in their asset allocations in the past five years, to diversify and seek out higher returns.

Tekne also manages a long-short strategy that does invest in US stocks, and its holdings include the likes of Square Inc, Netflix and T-Mobile.

Mr Kothari founded Tekne in 2012 after a stint as a portfolio manager at PointState Capital, a multi-billion dollar global macro investment firm.

Prior to PointState, Mr Kothari was a portfolio manager at Duquesne Capital Management, the investment firm founded by Mr Druckenmiller.

At Duquesne, Mr Kothari managed a global technology, media and telecom portfolio and also assisted in managing the fund’s broader technology exposure. He joined Duquesne as an analyst in 2005 and became a managing director four years later, according to his profile on Tekne’s website.

While in Australia in 2018 when tech behemoths were confronting US Senate hearings and concerns about their consumer data privacy practices, Mr Kothari said history showed increased tech regulation had actually emboldened and strengthened incumbents.

“It is quite hard to go from speech to legislation. These are global businesses, they live in 50 jurisdictions around the world. It becomes quite different to formulate legislation that can microscopically affect Google and Amazon but not a start-up tech company at the same time,’’ he said.