Specialist Australian small and micro-cap manager Naos Asset Management has launched a managed fund that will invest in Australian private businesses involved in sectors with long-term structural growth trends.
The new offering will invest in up to 20 companies that have presented a sustainable competitive advantage and is aiming to raise $35 million in capital.
“The Naos Private Opportunities Fund will provide exposure to an asset class that can be difficult to access for individual investors and SMSFs,” Naos managing director Sebastian Evans said.
“Yet the opportunity set in this sector is great – there are almost 50,000 private businesses with turnover in the $2 million to $10 million range, whilst there are only 375 listed companies in the $5 million to $100 million turnover range.
“The market is witnessing a trend of quality private companies choosing to stay private for longer and we want to take full advantage of this movement. Excluding mining and energy companies, in 2017 there were 90 IPOs (initial public offerings) and this number has continued to decline with 54 IP0s in 2020 and 31 in H1 2021.”
The fund has prioritised business models with established revenue profiles over $5 million annually, founders that align with shareholder interest, a competitive advantage assessed to increase over time and demonstrate the potential for long-term growth and the ability to benefit from economic tailwinds.
“There are many companies that do not want traditional private equity investment, do not want to IPO and do not want to cede majority control but have a need for increased capital. This fund will offer these businesses patient capital and access to the Naos network of business and advisory talent,” Evans noted.
The minimum investment amount for the fund is $100,000 and it is targeted towards investors with an investment horizon of at least five years.
Naos and other related parties will be contributing seed capital of at least $2 million to the fund.
The new fund is the manager’s fourth offering, joining its listed investment companies in the micro-cap, small-cap and mid-cap space.''