Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Aura Group moves up the VC curve with latest raising
Aura Group, an alternatives and wealth manager with a strong presence in Asia, has opened its second venture capital fund to wholesale investors. Damien Hatfield, of Mantis Funds, is lending a hand.
Tristan Terry, Sydney-based director of venture capital for Aura, says the target raising for the Aura Venture Fund II is $50 million, following the $20 million raised for the first fund.
The firm currently has 15 VC investments, which Terry says gives it a diversified portfolio across its main investment themes of e-commerce, sustainability and data and internet of things (IOT) businesses. The VC offering has been given a ‘recommended’ rating by Melbourne-based Atchison Consulting.
Aura was set up in Sydney in 2009 as an advisory business, which moved into alternatives funds management and then wealth management in Sydney and Singapore. It has a high yield fund, a property credit funs and tactical opportunities fund complementing the VC funds.
Terry said last week (May 27) that the first two investments for the second VC fund would be announced soon. One is a plant-based ‘meat’ manufacturer and the other a fintech which is looking to disrupt the bank guarantee system through the use of distributed ledger technology (blockchain).
Like most of its early investments, both are expected to qualify for the Government’s Early Stage Venture Partnerships (ESVP) scheme. This allows for tax-free capital gains from investments as well as a 10 per cent tax offset for amounts invested.
Fees are modest by VC standards, with a hurdle of 8 per cent IRR (internal rate of return) to be passed after initial investments are repaid. The 20 per cent performance fee then kicks in, effectively meaning the performance fee applies only after investors have doubled their money after a three-four-year period.
“There are huge tailwinds for VC in Australia at the moment,” Terry says. “Deal flow is very strong and the quality nis getting better… We’re also getting good deal flow from Asia.”
Calvin Ng, Singapore-based managing director, was a part of the direct investment team at Everest Babcock & Brown prior to starting Aura. He is also a director of portfolio companies Finsure Group and the listed IBuyNew Group and Catapult Group International.
Damien Hatfield, co-founder and head of distribution for Mantis Funds, an alternatives platform, is consulting to Aura for the latest capital raising. He said that Australian venture was typically too small for big super funds to invest in. Aura was therefore targetting high net worth investors, family offices and independent dealer groups.
The firm had invested in its systems and staff over the past six years, Terry said, and was now “institutional grade” in terms of governance and back office. He and Hatfield expect to be approaching smaller super funds for the third VC offering after the next series of investments is completed.
