Blue Sky Funds Management will include water investments in its new retail private equity fund to be launched in the New Year.
The manager eventually hopes to launch a separate private equity water fund to give investors exposure to the sector.
Blue Sky managing director Mark Sowerby said water investments would initially be about 20 per cent of the new retail fund.
“It is impossible to get clear exposure to the large water businesses but we will be [considering] related companies looking for a capital injection,” he said.
“We will be looking at irrigation companies and service industries to the major water suppliers.”
The new retail private equity fund will be open to investors from March next year and will close in June.
The fund will have a limited number of investors and intends to raise about $50 million.
The manager already operates a generic private equity fund for sophisticated investors and has $130 million in funds under management.
Sowerby said the company was talking to dealer groups and their research arms about the new fund and the opportunities in private equity.
“We are speaking to Australian super funds and financial planning networks that are considering allocating a greater proportion of funds to alternative assets,” he said.
“The fee-for-service model will likely increase the willingness and ability of financial advisers to recommend alternative investment products, including private equity, to their clients.”
Blue Sky has built a water private equity team to move into this sector and is currently trading water entitlements.
The manager is also expanding its residential real estate and is looking at investing in new developments in Queensland and New South Wales.
Sowerby said the manager’s structure would allow it to capitalise on future growth trends in the Australian economy.
“The approaching mass retirement of an entrepreneurial generation — baby boomers — means a lot of good small and medium sized enterprises will be coming on the market,” he said.
“While younger generations, driven by shifting priorities such as the challenges posed by environmental issues, growing populations or mass migration, will pioneer new or change existing industries.
“The challenge for us at Blue Sky is to ensure we continue to use our networks to be a part of this changing landscape and make the most of the opportunities it presents.”
