Crossover fund running at 26% IRR
17 Oct 2021 - Performance
Wunala Capital has reported a 15.3% internal rate of return (IRR) for its Emerging Opportunities Fund for the month of September.
The September return takes the total return for the fund over the 11 months since inception to 26% net of all fees.
Sydney-based Wunala launched the fund to invest in pre-IPO and IPO opportunities across technology, financial services, healthcare and other high-growth industries. The crossover fund targets companies, primarily in Australia, New Zealand, the US and Israel, pursuing listings on the ASX.
According to Wunala, several Emerging Opportunities Fund investee companies are in advanced stages of IPO planning which it anticipates will deliver further upside performance through to the end of the calendar year and beyond.
Wunala founder Scott Wilson said a strong September quarter for the fund meant that it had already exceeded its 12-month target of generating a 20% IRR.
Wilson said the fund did not revalue private positions, usually held for 9-12 months, until external valuation events occurred. In addition to IPOs, trade sales and further private funding rounds were currently being worked on by some portfolio companies.
The primary driver of returns for September was the successful IPO of Li-S Energy (ASX: LIS), Wilson said.
Wilson said overall the investment in Li-S Energy had delivered slightly more than a 4x blended return since Wunala’s initial investment in March. Wulnala had built its position while the company was still private and had added to the holding in the IPO.
Li-S Energy, which raised $34 million in the IPO and listed on the ASX on 28 September, has developed a new lithium-sulphur (Li-S) battery using boron nitride nano-tubes to increase energy density well beyond that of lithium-ion batteries resulting in longer battery life.
“The technology underpinning Li-S Energy is very exciting and shows immense promise if it can be scaled up and be proven to be cost effective to manufacture,” Wilson said. “As the stock came on strongly, it significantly exceeded our target price and we reluctantly sold down the bulk of our holdings in order to take (fairly sizeable) profits and reduce concentration risk.”
The Emerging Opportunities Fund had made six new investments over the September quarter including in Marketplacer (See separate item this issue).
Image: The successful IPO of lithium-sulphur battery producer Li-S Energy was the primary driver for the Wunala Emerging Opportunities Fund’s strong performance in September.