The Evergreen team has examined the strengths and weaknesses of the product, as well as a detailed look into the fund manager, key personnel, governance, compliance and track record analysis.

Evergreen Ratings has awarded the Manning Monthly Income Fund a score of “Highly Commended”. Consultant Dominic Beange noted that “The Fund has continued to meet its target return and has had no monthly negative returns attributable to credit losses. Manning AM continue to externally value their assets monthly, and since our last review Manning AM have commissioned external rating of all Fund assets.”

Evergreen Director Angela Ashton highlighted the detailed due diligence conducted by the manager as a particular strength of the product, while the team noted that investors could be exposed to risks such as credit risk and absence of secondary liquidity.

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(L to R): Michael Ohlsson, Karen McLeod and Alexandra Brown

In a recent web discussion, Evergreen Consultants, an independent investment consulting business, invited a group of responsible investing experts to discuss the pros and cons of incorporating Responsible Investment (RI) into a financial planning practice and what the upside looks like.

These included Karen McLeod, Financial Planner, Ethical Investment Advisers, Alexandra Brown – Founder, Ethical Invest Group and Michael Ohlsson – Director, Evergreen Consultants.

The great debate touched on the following themes:

• What are the hurdles Financial Advisers need to be aware of?
• Are there misconceptions that are making you more fearful of RI than you need to be?
• What are the easy wins when it comes to incorporating client beliefs into portfolio construction, where is the best place to start and how?
• How RI will add value to your practice.

Watch the webinar video.

The post The pros and cons of incorporating Responsible Investment into your practice: webinar debate appeared first on AdviserVoice.

The Fund is open to wholesale sophisticated investors, with a minimum investment of $50,000, providing access to venture capital for investors who often have trouble getting into that market.

Evergreen Ratings Founder and Chief Executive Angela Ashton says: “OurCrowd 50 Fund invests in companies that would normally be funded by institutional investors or hard to access venture funds. It caters to investors with an appetite for risk and an interest in gaining exposure to unlisted growth companies.”

The Fund’s objective is to generate long-term capital appreciation, through exposure to 50 OurCrowd portfolio opportunities. The investment time frame is 10 years.

OurCrowd invests mainly in technology start-ups based in Israel and North America. Israel has a booming venture capital market, with the world’s highest level of venture capital money invested per capita and the third-largest number of listings on the NASDAQ market.

Ashton says: “In all venture capital exposures there is a high risk of loss from individual investments, requiring a portfolio approach for most investors. Ideally such exposures should be with fund managers that have access to quality deal flow. On the evidence presented we believe that OurCrowd meets this requirement.”

The OurCrowd Platform has US$1.8 billion deployed either in funds or as single investments. Since it was launched in 2013 it has made more than 300 investments, which have resulted in 56 exits so far.

The OurCrowd investment team reviews over 3000 technology companies a year and invests in 1% to 2% of them. OurCrowd employs many levers to access leading technology investments and also offers co-investment opportunities into individual deals.  This allows major institutional investors to choose investee companies from the OurCrowd platform.

Its investment philosophy is based on evidence that shows higher returns come from early-stage investing.

The firm is based in Jerusalem and has 14 offices around the world, including Sydney. It was founded in 2013 by global technology leader and venture capitalist Jonathan Medved.

It has strategic relationships with a number of financial institutions, including Softbank, National Australia Bank, United Overseas Bank (UOB), Hana Bank, NTT Finance, Orix and Stifel

Ashton says: “The network allows for tremendous access to deal flow and access to non-market information. Evergreen sees this as a competitive advantage.

“Evergreen has reviewed a number of early-stage investment opportunities and so far, none has provided global or sector diversification to the extent of the OurCrowd 50 Fund.”

The post Early-stage venture capital opportunity nabs Evergreen ‘Commended’ rating appeared first on AdviserVoice.

The iPartners Core Income Fund was launched in May 2021. Targeting a return of 6 to 8% a year (after fees), the Fund invests in a portfolio of iPartners co-investments, private credit, asset-backed securities, property finance, cash and a selection of third-party alternative funds and assets.

Evergreen Founder and CEO Angela Ashton says iPartners’ approach is innovative and “makes for a powerful proposition for its target market.”

Ashton says iPartners is nimble and well resourced, and offers a point of difference because of its specialisation in bespoke financial solutions.

“It meets a pressing need for self-driven investors to generate income, when prevailing yields are low. The combination of these traits is attractive, providing a re-bundled basket of risks that offers access to the yields previously only available to institutional lenders,” Ashton says.

Key features of the fund include diversification and liquidity. To reduce concentration risk maximum individual asset weightings are 2.5% to 5% of the total portfolio. Monthly redemptions are offered, subject to available liquidity.

The iPartners approach involves all stakeholders having “skin in the game” to align the interest of staff, clients and investors. Evergreen points out that this can involve management in conflicts of interest but it commended iPartners for the quality of its disclosure.

Some of iPartners’ transactions include three capital raisings for Harvest Hotels, which is building a portfolio of regional hotels, a loan facility for small business lender OnDeck, and a convertible note raising for labour hire company WorkPac.

Established in 2017, the iPartners operation encompasses commercial lending, investment banking (equity and debt capital raising for Australian businesses), funds management and a wholesale investment platform that provides access to third-party alternative assets.

Co-founders Travis Miller and Ron Nankivell both had long careers in financial markets before starting iPartners, including senior roles at leading commercial and investment banks.

The Fund has grown steadily since inception and forms part of the $130+ m FUM for iPartners Funds Management (as at January 2022).

The post Evergreen ‘commends’ alternative income generating asset manager appeared first on AdviserVoice.

Angela Ashton

Specialist alternatives research firm Evergreen Ratings, has highlighted the increased adoption of private debt as an attractive investment asset class in its latest Ratings Report.

“However, this market is increasingly diverse and growing rapidly, so it is not easy to understand its complexities,” notes Angela Ashton, founder and CEO of Evergreen Ratings.

“We assess a breadth of investment managers operating in this space and over and above the standard investment essentials in a private debt mandate, and we believe there are three themes that distinguish excellent investment managers in the sector. They are:

1. likes the assets to lend against (understand the underlying market dynamics that the borrower operates in and ideally grow or refi debt participation in line with borrower growth)
2. lend where the money is genuinely needed (identify where regulation (namely, bank disintermediation) and other impediments have diminished credit availability – the most attractive risk-adjusted returns are likely found where these forces are most extreme and the supply and demand of capital are unbalanced)
3. the easier it is to scale, the less attractive it is likely to be (institutional investor demand is often heavily influenced by visibility and those debt managers seeking such FUM flow often target a private debt opportunity set that focuses on ideas that are simple to raise capital, meaning they tend to crowd toward similar opportunities).”

“Keeping these principles in mind, we are of the strong view that investors that are selective in private debt investment manager choice will be well served from a risk and return perspective, “ notes Ashton.

Given this backdrop, the latest Evergreen Report has awarded a “COMMENDED” rating to iPartners Investment Fund (IIF), one of the largest non-institutional private credit funds in Australia.

Evergreen notes the fund, which targets returns of 8-10 %pa, posted a first-year return of 9.71% net of fees, “excels in the Australian private debt peer group both in relation risk-adjusted returns and, related to this, collateral protections, particularly with respect to ABS lending.”

Evergreen notes: “Returns, at 9.7% p.a. since inception, are strong due to a high degree of crystallisation of two of the three private debt premia components, specifically a complexity and  supply/demand premium.

“iPartners is the only manager that Evergreen Ratings is aware of with a structure that (appropriately) provides liquidity to an inherently illiquid asset class.”

According to iPartners CEO, Travis Miller: “IIF provides investors with a diversified portfolio of high yielding credit investments, with low portfolio concentration, and a strong preference for investments that produce risk adjusted returns.

“The Fund evolved from investor feedback where investors wanted to combine their direct co-investing with iPartners with a pooled co-investment vehicle,” says Miller.

Evergreen further notes: “All loans are secured against either a portfolio of loans, receivables (both in relation to ABS), property (CRE debt) or cashflows (corporate debt).”

The target portfolio allocation is ABS: 0-40%; CRE: 0-40%; Corporate debt: 0- 40%.

As at 31 March 2021, the weighted average loan maturity is 1.14 years.

“ABS is the Manager’s speciality, with CRE and corporate debt investments undertaken on a co-investment basis with select Australian domiciled private debt managers all of which are considered best-of-breed in their respective private lending subcategories,” says Evergreen.

The Evergreen report notes the success of the fund achieving return targets and that “the Manager levies a particularly ‘skinny’ all-in fee of 0.6% p.a”

The Fund has grown steadily since inception, and sits at $13.70m as at March 2021, and represents a modest component of the $650m across the iPartners platform.

The Evergreen reports notes the track record of IIF is short, “but we take conviction from strong debt management processes. Merits and point of differentiation are exceptional. The Fund excels in the Australian private debt peer group both in relation risk-adjusted returns and, related to this, collateral protections, particularly with respect to ABS lending.”

The post Significant opportunities remain for investors in the Australian private debt sector appeared first on AdviserVoice.

Campbell Dawson

Hybrids have been a popular choice for many investors over the last decade, producing returns that have been slightly less than equity markets, but with much lower risk.

Hybrids are typically issued by financial institutions, including the big banks. They are issued at floating rates and are popular with retail investors because they offer higher yields than term deposits.

While retail investors may see them as an alternative to Term Deposits, Hybrids have a number of equity-like characteristics: distributions are discretionary; they are perpetual rather than having a fixed maturity and they are called at the discretion of the issuer; and they can be converted into equity by the issuer or regulator if certain trigger events occur, notes specialist alternatives research firm Evergreen Ratings.

Evergreen Ratings recently looked at the Hybrids sector and assigned a “Satisfactory” rating to Elstree Investment Management’s Hybrid exchange traded product, the Elstree Hybrid Fund (Chi-X: EHF1).

Evergreen says the Fund is a welcome opportunity for Australian investors to access a well-considered, carefully crafted portfolio of equity hybrids, while enjoying the yield experience of this market segment.

Evergreen Ratings Founder Angela Ashton says: “We believe that hybrid portfolios require ongoing active management because hybrids come in many flavours of debt, equity and embedded options.

“As hybrids are sold into the market, retail investors tend to sell older hybrids (where some of the optionality creates additional uncertainty) in order to buy the newer issues. The result is that the market can oversell, creating opportunities for informed investors.”

The Fund’s aim is to deliver a return greater than short-term interest rates by creating a portfolio of hybrid securities. The Fund was quoted on Chi-X Australia in April this year.

Elstree’s investment case is that the equity hybrid market is inefficient, due to the large number of retail participants and the complexity of each hybrid issue. This inefficiency creates opportunity for an investment manager.

Evergreen says Elstree has a well-credentialed investment team and its investment philosophy, strategy, process and risk management are all tried and tested.

Elstree Hybrid Management Director, Campbell Dawson, says: “With record low interest rates and global instability in the equity markets, investors are crying out for investment options that outperform cash but with less risk than equity markets. An actively managed hybrids portfolio has the potential to fit within that category.”

Mr Dawson adds: “We believe the hybrid market offers opportunities for active investors as it is inherently inefficient. It is dominated by retail investors who have a limited understanding of bank and insurer capital issues, and who under and overreact to issuer specific risks and equity market movements.  We construct portfolios which seek to benefit from market opportunities and inefficiencies and pass these returns on to our investors.”

Elstree uses a bottom-up research process to analyse each hybrid security and ranks each hybrid on a risk-adjusted basis. Weightings are based on the issuer’s credit quality, the security’s liquidity and its price relative to Elstree’s valuation.

The Fund is designed to allow retail investors to access the same successful and long-term investment strategy as Elstree’s actively managed unlisted wholesale fund, the Elstree Enhanced Income Fund (minimum investment $500,000) which has produced an average return of more than 7 percent a year over the past 10 years.

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The unlisted property fund currently comprises four multi-tenanted healthcare focused properties, with total value of $183.45 million (as at November 2020).

The fund is managed by Elanor Funds Management Limited, which part of the ASX-listed Elanor Investment Group (ASX:ENN).

The report observes the Fund gearing on establishment in March 2020 was 65% and that it is the Investment Manager’s intention to progressively reduce the Fund gearing to approximately 50% with successive acquisitions geared at 50% and any contribution of upwards property valuations.

Evergreen Founder and CEO Angela Ashton says: “For over twenty years, the healthcare sector has by and large been a positive contributor to the overall performance of both the alternative property investment markets and to the Funds holding assets in the sub-sector.

“Australia’s ageing population is considered a driver of demand for medical services. The Healthcare sector has the potential to emerge as a core real estate sector. Economic activity and employment growth in the healthcare sector are the fastest growing since the GFC and we believe property funds will benefit from these investment opportunities.”

“The trends in the industry in recent times include:

• Demand increases in line with an ageing and increasing population;
• Higher day procedure centre usage;
• New hospital developments integrating allied services such as pathology, pharmacy and radiology;
• Ongoing changes to private health insurance; and
• Viability of smaller medical and surgical hospitals threatened, partly due to the significant capital and operating costs.”

“Elanor Investors Group has over $2 billion of assets under management and since listing in 2014, has achieved an average pre-tax total return to investors, after fees, of approximately 20% p.a. on all realised investments,” said David Burgess, Elanor Co-head of Real Estate.

“The Elanor Healthcare Real Estate Fund’s strategy is to invest in healthcare real estate assets including multi-tenanted medical centres, diagnostic facilities, day surgeries, specialist treatment facilities and private hospitals.

“We then actively manage the fund’s assets to optimise the use of the properties and are looking to acquire additional healthcare real estate assets to build scale and diversification,” Mr Burgess said.

The post Evergreen grants “Commended” rating for Elanor Healthcare Real Estate Fund  appeared first on AdviserVoice.

Angela Ashton

Specialist alternatives research firm Evergreen Ratings has assigned a “Commended” rating to the Wentworth Williamson Stable Income Fund, saying it has a “very high degree of conviction” that the Fund will deliver on its 6%-plus income target.

Wentworth Williamson is a relatively new player in the growing private debt market, with a fund that specialises in funding non-bank lenders. It was established by a group of former Investec executives in 2013 and the Stable Income Fund (one of two funds the firm manages) was launched in 2018.

Currently, the Stable Income Fund has one major investment, providing funds to Credabl, a specialist lender to medical professionals. The Fund is targeting an income return of the bank bill swap rate plus 6% (net of fees of 1%).

Evergreen says the Fund’s security over its financing is “extremely strong”, being based on a three-tier waterfall: personal guarantees; collateral over financed items; and life insurance.

It says it has “a very high degree of conviction that the Fund will deliver on its target return.”

And it adds Credabl’s track record is strong, reflecting the low default rate among medical professionals.

Wentworth Williamson provides its funding through private market asset-backed securities warehouse structures. Evergreen says a significant investor protection built into ABS warehouse funding is the originator’s first loss investment, in addition to the usual collateral-related protections.

Evergreen Ratings has a positive view of Australian private debt as an asset class.

The firm’s Founder and CEO Angela Ashton says that in recent years, with authorised deposit-taking institutions (ADIs) facing more onerous regulatory guidelines, the domestic market has seen more borrowers seeking funds outside traditional banking sources.

“The market dynamics are supportive of attractive risk-adjusted loan pricing which presents an opportunity for a capital provider to earn excess returns,” Ashton says.

“We do not believe the fundamentals of this market in Australia will deteriorate over the foreseeable future,” Ashton says.

“The Wentworth Williamson Stable Income Fund is designed to provide attractive risk adjusted stable returns in the form of a monthly payment to our clients,” adds Rob Hamer, Portfolio Manager at Wentworth Williamson.

“Our value proposition focuses on specialised non-bank lenders and other opportunities where the provider has a right to win and where our clients are afforded strong first loss protection.  We believe this product should fit nicely as part of a portfolio as a diversifier away from traditional bank hybrid and other domestic property focused income exposures. We are pleased to have been able to work with Evergreen as a ratings partner,” notes Hamer.

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In a new research report, Evergreen Ratings has given a ‘Commended’ rating to Global Credit Investments’ Commercial Finance Fund, which invests in this sector providing senior commercial debt facilities secured by physical and financial assets.

Evergreen Ratings Founder and CEO Angela Ashton says that in recent years, with APRA-regulated authorised deposit-taking institutions (ADIs) facing more onerous macro-prudential guidelines, the domestic market has seen more borrowers seeking funds outside traditional banking sources.

For non-ADIs, such as Global Credit Investments (GCI), there has been an increasing flow of potential lending opportunities, as well as the ability to be more selective about which loans to proceed with.

“The market dynamics are supportive of attractive risk-adjusted loan pricing which presents an opportunity for a capital provider to earn excess returns,” Ashton says.

At the same time, investors seeking yield are finding fewer attractive opportunities. “Interest rates are at historical lows and stock dividends fell last year due to the effects of COVID-19,” Ashton says.

“This leads to a situation where people are struggling to find good sources of consistent yield. Private credit is an asset class that can help to fill that portfolio need and we are seeing more and more of these types of funds approach us for consideration. However, these funds are not all the same. There are important nuances in lending practices and the types of borrowers each manager targets. It’s important to understand the risk each fund is taking and to ensure you are being properly rewarded for that.”

GCI was co-founded in 2015 by Steven Sher and Gavin Solsky. Steven spent 17 years in senior investment and executive roles at Goldman Sachs, and Gavin founded the professional services and outsourcing firm Portland Group.

Steven Sher says: “We’re proud to be awarded the ‘Commended’ rating for the GCI Commercial Finance Fund from Evergreen Ratings.

“Since its inception, our Commercial Finance Fund has outperformed investor expectations and provided them with exposure to private credit markets that are typically difficult to access. The preservation of our investor’s capital and managing downside risk is at the core of all GCI investments.

“We’re delighted to have simultaneously partnered with and funded our borrower clients’ growth,” says Sher.

The fund targets a return of around 8.5 per cent a year, net of fees. It invests in the smaller end of the private debt market, with loans ranging from $5 million to $30 million.

The fund was launched in July last year, when two established GCI funds were merged. It has returned 9.3 per cent on an annualised basis since then and it has not recorded any loan defaults.

Evergreen considers that the GCI Commercial Finance Fund is well positioned to capitalise on private debt premia.

Ashton says: “Private debt can be an attractive asset class due to private debt premia. It is also one of the few asset classes where the skillset of the manager can actually demonstrate the ability to preserve investor capital.”

She adds: “Evergreen looks for private debt premia from several sources, including:

• illiquidity premium, which is the compensation required for not being able to trade the debt security on an exchange;
• complexity premium, which is the compensation required for analysing deals in the private market and structuring appropriate risk mitigation; and
• supply/demand premium, which comes from playing in the lower end of the market where there is less competition.

“We do not believe the fundamentals of this market in Australia will deteriorate over the foreseeable future,” Ashton says.

Ashton says the GCI fund incorporates a number of risk protections. These include taking senior security over all assets of the borrower, the establishment of a special purpose vehicle to house all collateral and a requirement that the borrower provide a first loss provision.

“The fund is underpinned by a very strong investment philosophy and the track record to date. Combined with GCI’s investment processes, this augurs well for future performance.”

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Angela Ashton

In an environment of low interest rates and returns, the pre-IPO and small cap equities sector offers high growth opportunities for investors, according to new specialist alternatives Research firm Evergreen Ratings.

“The listed market clearly offers attractive growth opportunities but it is the pre-IPO private market that is gaining more attention. The performance of the pre-IPO market is broadly linked to the strength of the underlying equity market and investor appetite for equity capital market and IPO transactions.

“The returns generated across the pre-IPO market have been very strong and continue to attract specialist fund managers to this area,” notes Angela Ashton, founder and Director of Evergreen Ratings.

One of the fund managers in this sector is Bombora Investment Management which offers the Bombora Special Investments Growth Fund (“Fund”) investing in Australian and NZ based pre-IPO enterprises and listed small caps.

This Fund has recently scored Evergreen Rating’s top rating of “Highly commended”.

Evergreen Ratings note: “The Fund returned +29.8% in the 12 months to 31 December 2020, and has doubled in value since its launch less than three years ago, currently holding $78 million in funds under management.

“It is designed to capture early-stage growth from Australasian companies that use technology as a disruptor across sectors that cover technology, telecommunications, media, healthcare and financial services. The asset allocation model of 40-50% listed companies, 40-50% pre- IPO companies and 10-20% cash provides access to both high growth businesses and a significant level of liquidity not normally found in Bombora’s small peer group.

“Diversification is paramount to the decision making and an essential element behind portfolio construction and management.”

The Evergreen report notes Bombora Investments Management (BIM) comprises a team of experienced investors and specialist advisors, headed by Mike Hill, who provide advice to fund companies on capital raisings and operational strategy and a range of advisory services including governance, reporting, management structure, recruiting and mergers and acquisitions counsel.

“The Manager’s senior members have a significant portion of their wealth invested in the Fund. This co-alignment of interests with external investors provides significant comfort to Evergreen,” notes the ratings report. The alignment of BIM with investee companies allows those companies to benefit from BIM’s IPO experience.”

Investee companies in which Bombora has aided in taking to public markets prior to the launch of the fund include:

Rhipe (ASX: RHP) a leading cloud software licensing expert in the APAC region; litigation funder JustKapital (ASX :LAW), Livetiles (ASX:LVT), developer of digital workplace platforms; DMC (ASX:DMC) Design Milk, a luxury designer goods online market place; Janison (ASX:JAN) a digital education provider; ACROW (ASX:ACF) provider of formwork to and construction industries, and Pacific Knowledge Systems (ASX:PKS) provider of automated decision making process in healthcare organisations

A recent investee company pre-IPO capital raising involving Bombora was a 2020 raising for software content company, ORBX, that specialises in developing flight simulation graphics.

Mike Hill, Managing Director and Co-CIO, adds: “The December 2020 quarter was another busy period for us, with multiple new pre-IPO investments securing additional funding including Bike Exchange (ASX:BEX), MadPaws Limited (ASX listing ~ March 21), Nviso Limited (ASX listing ~April 21) and Mobecom Limited (ASX:MBM). We also successfully added new listed securities, participated in a series of IPOs and divested overweight positions across the portfolio.”

“The pipeline of opportunities is significant and we now have a number of our earlier investments which will hit the ASX boards through the first half of CY21. This is an exciting time for the team,” he says.

Gregg Taylor, Co-CIO Listed Equities notes: “Bombora continues to provide attractive co-investment opportunities to our Fund investors enabling enhanced returns in a very strong pipeline of new transactions.

“The outlook for the Bombora Fund continues to be positive across all segments of the portfolio and the whole team is working hard to guide these emerging growth companies as they execute operational objectives.”

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