Wilson reboots Blue Sky Fund

The alternative assets fund once managed by Blue Sky Investments is pivoting to take advantage of emerging economic trends.

Geoff Wilson. Picture: David Geraghty.

The alternative assets fund once managed by collapsed manager Blue Sky Alternative Investments is pivoting under new administrator Geoff Wilson’s Wilson Asset Management to benefit from emerging economic trends like an ageing population, government infrastructure spending and growing demand for irrigation water rights.

In a briefing to shareholders on Wednesday WAM Alternative Assets portfolio manager Dania Zinurova said the WAM fund would aim to expand into classes like infrastructure and private debt while maintaining exposure to private equity, real estate and real assets.

“I’ve been looking at the increasing government spend in infrastructure,” Ms Zinurova said, reflecting on the fund’s recent partnership with specialist infrastructure manager Palisade.

“Just this week the Australian government announced their infrastructure spending will amount to $110bn, which means that over the last eight years Australian governments have spent over $170bn in infrastructure, so this year will be a real boost to the sector.

“For me infrastructure was more of a natural asset class to look at how to leverage this spend … Australia is one of the most mature and developed markets in this asset class.”

The fund was previously known as the Blue Sky Alternatives Access fund and was managed by the ill-fated Blue Sky Alternative Investments, which had a market capitalisation of $1bn in 2017 before spectacularly falling into receivership in 2019 in the wake of harsh short seller reports.

Blue Sky’s collapse also sparked a high profile defamation case between former managing director Elaine Stead and Australian Financial Review columnist Joe Aston.

The fund’s management was transferred to WAM last October after receiving 99.97 per cent of shareholder approval in favour of the deal.

Ms Zinurova said the fund, which has $217.6m in gross assets, would be revamped.

“By 2025 I expect that we will exit most of the inherited illiquid investments and will continue recycling the capital into new investment initiatives following our rigorous investment process,” she said.

Ms Zinurova said she anticipated three to four exits would be made this year, while capital has been committed to three new investments: The Palisade diversified infrastructure fund, the Barwon Institutional Healthcare Property Fund and an Australian based mid market buyout private equity strategy.

The commitment to healthcare assets was motivated by an ageing population and the COVID-19 pandemic.

“That means growing or strengthening demand in healthcare services,” Ms Zinurova.

“The reason I chose healthcare real estate is based on the fact that it is still an undersupplied market, so there is more room to develop those assets, more room for growth, and there is definitely more room for capital appreciation.”

Ms Zinurova also said that a growing demand for food would underpin demand for irrigation water rights – which currently make up just more than 32 per cent of the fund’s portfolio – despite a recent ACCC inquiry into the sector.

“The key thing was to see that the ACCC did not identify any misconduct by market participants and encouraged more institutional investors coming in to actively participate in this market,” she said.

“Institutional investor ownership of the water rights market in Australia is very small, it is around 7 to 10 per cent.”

The digitisation of the economy and society was also a key theme driving investment plans, but Ms Zinurova said this did not extend to crypto currency at this time.

“At the moment I really see crypto currency as one of the investment themes that are high on the risk return spectrum … I also see this asset class as still emerging and evolving in terms of their institutional quality.

“I think from my perspective, whether I would be prepared to invest in this asset class, the answer is no – however, It doesn’t mean I exclude it completely in the future depending on how this sector develops.”