The Brisbane, Australia-based Blue Sky Alternative Investments Limited (ASX: BLA), formerly known as Blue Sky Funds Management Pty Limited, is a diversified alternative asset management company established in 2006. It manages investments across private equity, private real estate, infrastructure, hedge funds, as well as water asset classes and mainly serves retail and institutional investors. The company has operations across Adelaide, Brisbane as well as New York.
On February 12th, 2019, Blue Sky announced its financial update on the expected figures for the first half of the 2019 fiscal year until December 31st, 2018 (H1 FY2019). The final report is scheduled for release on the February 27th, 2019.
The Company is anticipating an underlying loss before tax of the value between $ 28 million to $ 32 million, subject to the final review and approval from the auditors and the Company Board. As of December 31st, 2018, the company’s cash position was at around $ 54.8 million on an unaudited basis relative to $ 40 million at the end of the previous half year ending June 30th, 2018, including withdrawal of around $ 50 million convertible note facility with Oaktree Capital Management.
The factors contributing to the weak cash position include restructuring expenses, fund expense recovery repayments, working capital loans, investments and co-investments of existing capital with institutional investors in real assets and investment in a US energy storage project.
In hindsight, the company embarked on a restructuring journey since July 2018, which has effectively brought benefits in the form of improvement in its investment operations, governance and risk portfolio. The all-inclusive restructuring of Blue Sky’s investment management business continued into the H1 FY2019 wherein the company terminated its retirement living real estate development business and Hedge Fund business; sold its stake in the retirement village operating business; and conducted job cuts across all the remaining business divisions.
Furthermore, the value of the Net Tangible Assets (NTA) is expected to be lying between $ 102 million to $ 106 million, inclusive of approximately $ 22 million accounting impact from the adoption of AASB 15. Also, the company informed that the Fee-Earning Assets under Management amounted to $ 3.0 billion as of December 31st, 2018, down from $ 3.4 billion at the end of June 30th, 2018, mainly resulting from the shutdown of the hedge fund and retirement living businesses.
Nevertheless, the ongoing restructuring has brought down annual expenses, depicting progress towards the previously announced target of aligning fixed cost base with recurring management fee revenues, thus reducing its historical reliance on deal and performance fees.
Besides, a new Board of Directors was appointed in December 2018, followed by a new Chief Financial Officer who commenced his tenure in mid-January 2019. Of late on January 24th, a new Chief Risk Officer also joined permanently.
Blue Sky has a market capitalisation of AUD 50.2 million with approximately 77.71 million outstanding shares on the ASX. With the close of the trading session on February 12th, 2019, the BLA stock was trading at a market price of AUD 0.910, up 41.085%, indicating an intra-day gain of AUD 0.265.
Over the past six months, the stock has been mainly down with a negative return yield of 66.14 %.
The Company’s ongoing restructure has significantly reduced annual expenses representing progress towards Blue Sky’s previously announced target of aligning its fixed cost base with recurring management fee revenues.
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