Blue Sky Alternative Investments Ltd (ASX: BLA) is a fund manager that offers investors 'alternative' assets like private equity and a water fund.
The fund manager can point to an impressive performance of its various asset classes. After fees and its returns per annum since inception to 31 December 2017 have been 13.9% for private equity, 15.8% for private real estate, 16% for 'real assets and 8.7% for hedge funds. Overall, the return has been 15% per annum since inception and the realised returns were 16.7% per annum.
Today, Blue Sky announced that it intends to carry out a fully underwritten share placement to professional investors to raise around $100 million. It will also offer a share purchase plan to existing shareholders to raise $25 million.
The offer price for the capital raising will be $11.50 per share, which represents a 5.3% discount to the last traded price on 2 March 2018.
The new shares will represent around 12.6% of the company's issued capital.
Blue Sky said that the funds will be used to provide additional co-investment alongside institutional investors in funds and mandates managed by Blue Sky. It will also provide balance sheet support for new Blue Sky funds, investment platforms and/or joint ventures.
Management believe that there are compelling industry drivers for the company with the Australian funds management industry expected to reach $11 trillion by 2037, according to the RBA. There is also a trend of increasing allocations to alternative assets, with Australia seeing growth to an 18% 'alternative' allocation.
Foolish takeaway
I'm not sure what to make of this capital raising, investors will need to make up their own mind. Blue Sky is clearly doing very well with its underlying business and will hopefully grow strongly in the years ahead. It's probably perfect timing to raise capital as there could be more volatility ahead with Donald Trump's trade war threats and rising interest rates.
