14 Jan

AIQ NTA Factsheet December 2021

Columbus Investment Services Limited ABN 69 095 162 931 AFSL 221183 Level 16, Governor Macquarie Tower, 1 Farrer Place, Sydney NSW 2000 • P: +61 2 8277 0000 • F: +61 2 8580 5700 • www.oneinvestment.com.au Postal Address • PO Box R1471, Royal Exchange NSW 1225 Columbus Investment Services Ltd as responsible entity for Alternative Investment Trust ARSN 112 129 218 ASX Code: AIQ (AIQ) ASX ANNOUNCEMENT 1 4 January 202 2 AI Q NTA Fact Sheet December 202 1 Please find attached the AI Q NTA Fact Sheet for December 202 1 Authorised for release by Columbus Investment Services Limited ACN 095 162 931 AFSL 221183 ( Responsible Entity ), the responsibility entity of the Alternative Investment Trust, and Warana Capital Pty Limited ACN 611 063 579 AFSL 493579, the investment manager of AIQ. For additional information on AIQ, including the latest fact sheet, please refer to www.thealternativeinvestmenttrust.com For any enquiries please contact the Responsible Entity on 02 8277 0000. TICKER: AIQ AU FURTHER INFORMATION may be obtained at www.thealternativeinvestmenttrust.com.au or by calling +612 8277 0000 Net Tangible Asset Backing (‘NTA’) AUD 39.96 million NTA per unit AUD 0.1421 Adjusted NTA per unit (1) AUD 0.1097 Units on issue 281,274,730 Investment Objective The objective of AIQ is to generate attractive pre -tax risk-adjusted absolute returns over the medium to long term while maintaining a focus on capital preservation. Investment Strategy The strategy of AIQ is to gain exposure to a portfolio of leading international absolute return funds and selected direct investments in subordinated debt and equity co -investments. Trust Facts as at 31 December 2021 Investment Objective & Strategy Portfolio Overview as at 31 December 2021 Portfolio Update and Commentary (1) Accounting standards require that underlying funds be held at the valuations provided by their third-party administrators and auditors. This results in an immediate valuation uplift for funds purchased in the secondary market at discounts to this value. The Adjusted NTA adjusts the value of funds purchased in the secondary market using the lower of their reported valuations and the Warana’s estimated projected recovery cash flows discounted at 10% p.a. (2) Four private equity funds: Fortress Investment Fund IV, Fortress Investment Fund IV (Coinvestment), Fortress Investment Fund V and Fortress Florida Coinvestment Fund Alternative Investment Trust Warana Capital Fact Sheet as at 31 December 2021 Note: The geographic allocation is estimated by the Investment Manager based upon available information and, therefore, may be inaccurate. The geographic allocation should be considered indicative only. Underlying Geographic & Cash Allocation (Incl. Look - through) Currency Exposure and Performance Top Look - through Positions A$mm % of NTA Asset Breakdown (A$mm) NTA Adj. NTA (1) Note: Some totals may not sum due to rounding. ? AIQ was down 1.5% and 1.4% in NTA and Adjusted NTA terms, respectively, during December. FX again was the primary driver of performance, accounting for -1.9% of the NTA and adjusted NTA movement as AUD strengthened against USD and GBP during the month. ? The investment portfolio was slightly positive with the King Street Special Investments and Alternative Liquidity Fund (“ALF”) being the gainers. ? In early November, King Street facilitated a liquidity option for certain Special Investments held by existing limited partners. AIQ opted into a portion of the sale process and the transaction closed in December with net sale proceeds of US$377k. The King Street Special Investments portfolio was purchased in November 2020 on the secondary market at roughly 30% discount to the underlying Manager Value and AIQ has now received approximately 56% of the purchased cost back in distributions. ? During the month, the Trust additionally received a total of US$302k distributions primarily from Warana 2018 Fund, of which 95% of the invested capital has been returned. That fund continues to track at net IRR of approximately 20%. ? We are pleased to announce another distribution of A$0.0036 per unit to continue AIQ’s target 5% return per annum. Payments will be made to all unitholders on or around 14 February 2022. For more information, please refer to the distribution announcements on the Trust’s website (www.thealternativeinvestmenttrust.com) or the AIQ-specific page on the ASX website. Secondary Market Funds Warana 2018 Fund 2.4 $ 1.8 $ Warana 2019 Fund 16.5 $ 9.0 $ Warana 2021 Fund 8.4 $ 8.1 $ King Street Special Investments 4.1 $ 3.8 $ Fortress PE Funds (2) 2.3 $ 1.8 $ Total Secondary Funds 33.7 $ 24.6 $ Primary Market Funds King Street Real Estate Fund 1.3 $ 1.3 $ Legacy AIQ Funds 1.8 $ 1.8 $ Total Primary Funds 3.1 $ 3.1 $ Direct Assets Alternative Liquidity Fund Ltd (LSE: ALF) 0.6 $ 0.6 $ Other Direct Assets - $ - $ Net Cash 2.5 $ 2.5 $ Total Direct Assets 3.2 $ 3.2 $ Total 40.0 $ 30.9 $ King Street Special Investments 7.7 $ 19.3% Fortress PE Funds (2) 4.1 $ 10.2% Virage Capital Partners 1.7 $ 4.2% Axon Partners 1.5 $ 3.7% COREalpha Private Equity Partners II 1.4 $ 3.6% King Street Real Estate Fund 1.3 $ 3.3% Crestline Offshore Recovery Fund II, L.P. 1.3 $ 3.4% Riverstone Credit Opportunities Income PLC 1.2 $ 3.0% Exposures: Investment Port. Cash Balances Total USD 100% 97% 100% AUD 0% 2% 0% GBP 0% 1% 0% December 2021 Performance Closing AUD/USD $0.7262 Closing AUD/GBP $0.5368 AUD/USD 1.9% AUD/GBP 0.1% AIQ Impact -1.8% AIQ Impact 0.0% 45% 25% 21% 9% 0% North America Europe Net Cash Emerging Markets / Other Other Developed Cents per Unit (31 December 2021) 14.21 10.97 Cents per Unit (30 November 2021) 14.42 11.13 Monthly Change (%) per Unit -1.5% -1.4% FURTHER INFORMATION may be obtained at www.thealternativeinvestmenttrust.com.au or by calling +612 8277 0000 Responsible Entity Columbus Investment Services Limited (‘Columbus’) ABN 69 095 162 931 AFSL 221183 Investment Manager Warana Capital Pty Limited (‘Warana’) ABN 44 611 063 579 AFSL 493579 Administrator Unity Fund Services Custodian One Managed Investment Funds Limited Management Fee 1.5% plus GST Performance Fee 20% plus GST of NTA outperformance over 8% pa hurdle ISIN AU000000AIUQ2 SEDOL B1B0GT6 ARSN 112 129 218 Domicile Australia Currency AUD Exchange ASX One Investment Group is an independent funds management business specializing in providing Responsible Entity, Trustee, Custody and Administration services. It operates multiple licensed entities to act as responsible entity and trustee for in excess of 300 registered and unregistered managed investment schemes. The total value of assets under administration by the group is in excess of $35 billion across a wide range of underlying asset classes. Warana Capital Pty Limited focuses on managing portfolios invested in third party funds and has core expertise in acquiring and managing funds acquired in the secondary market. The underlying funds and assets acquired are generally illiquid with uncertain holding periods to ultimate recovery. Warana has significant experience acquiring these funds at sufficient discounts to deliver absolute and annualised returns notwithstanding the time period and recovery uncertainty. Subject to sufficient cash reserves, AIQ intends to distribute 5% per annum of the Trust’s NTA, paid in semi-annual instalments. As at the end of the 2020 tax year, the Trust has in excess of A$400m in accumulated tax losses and in excess of A$20m in accumulated capital losses. Under certain circumstances and provided relevant legislative conditions are satisfied, these losses may be able to be applied against future taxable income to reduce the amount of taxable income and therefore the amount of any income distribution. Columbus Investment Services Limited (ABN 69 095 162 931) (AFSL 221183) is the responsible entity of the Alternative Investment Trust (ARSN 112 129 218) (‘Trust’ or ‘AIQ’). The information contained in this fact sheet was not prepared by Columbus but was prepared by other parties. While Columbus has no reason to believe that the information is inaccurate, the truth or accuracy of the information contained therein cannot be warranted or guaranteed. Anyone reading this report must obtain and rely upon their own independent advice and inquiries. Warana Capital Pty Limited (ABN: 44 611 063 579; AFSL: 493579) is authorised by and registered with the Australian Securities and Investments Commission. Warana is the investment manager of the Alternative Investment Trust. All references to Warana 2018 Fund, Warana 2019 Fund and Warana 2021 Fund in this document mean Warana SP Offshore Fund SPC - 2018 Segregated Portfolio, Warana SP Offshore Fund SPC - 2019 Segregated Portfolio and Warana SP Offshore Fund SPC - 2021 Segregated Portfolio, respectively. Warana believes that the information contained in this fact sheet is accurate when issued. Warana does not warrant that such information or advice is accurate, reliable, complete or up-to-date, and to the fullest extent permitted by law, disclaims all liability of Warana and its associates. This fact sheet should be regarded as general information only rather than advice. In preparing this fact sheet, Warana did not take into account the investment objectives, financial situation and particular needs of any individual person. AIQ is exposed to foreign exchange risk as a result of investments in financial instruments denominated in foreign currencies, particularly US dollars. This risk is implicit in the value of portfolio securities denominated in a foreign currency and transactional exposure arising from the purchase or sale of securities. The Investment Manager and Responsible Entity have not hedged AIQ’s exposure to the US dollar. The information contained in this fact sheet must not be copied or disclosed in whole or in part without the prior written consent of Warana, and Warana accepts no liability whatsoever for the actions of third parties in this respect. It is presented for informational purposes only and is not to be construed as a solicitation or an offer or recommendation to buy or sell any securities. Any opinions expressed in this fact sheet constitute Warana’s judgement at the time of issue and may be subject to change without notice. Warana is not obliged to update the information. The information must not be used by recipients as a substitute for the exercise of their own judgment and investigation. Neither Warana nor any of their directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or part of, or any omission, inadequacy or inaccuracy in, this fact sheet. Columbus and Warana do not guarantee the performance of the Trust or the repayment of any investor’s capital. To the extent permitted by law, neither Columbus nor Warana, including their directors, senior executives, employees, consultants, advisers, officers or authorised representatives, are liable for any loss or damage arising as a result of reliance placed on the contents of this fact sheet. Warana only provides services to wholesale clients, as defined in section 761G of the Corporations Act. Past performance is not indicative of future performance. Information in this fact sheet is current as at 31 December 2021. Third party data is owned by the applicable third party identified and is provided for your internal use only. Such data may not be reproduced or re-disseminated and may not be used to create any financial instruments, products or indices. Such data is provided without any warranties of any kind. Neither the third party data owner nor any other party involved in the publication of this fact sheet can be held liable for any error. Elective Professional Clients invested in the Trust who are individuals may be eligible complainants. If you have a complain t, please write to info@waranacap.com. Company Data and Information About the Responsible Entity of AIQ About the Investment Manager of AIQ Distribution Policy TICKER: AIQ AU Fact Sheet as at 31 December 2021 Alternative Investment Trust Warana Capital Numbers in this factsheet are unaudited. For the period up to 31 December 2021 covered by this fact sheet there were no material changes to any of the following: the Trust’s risk profile; the Trust’s strategy; and key investment personnel related to the Alternative Investment Trust. For information since that date, please refer to either of the following websites www .thealternativeinvestmenttrust.com or www .oneinvestment.com.au/alternative-investment-trust. Other Information AIQ Valuation The monthly NTA of AIQ is released by the 14th of each month and is available from AIQ’s website and the ASX. The NTA is unaudited and is calculated by aggregating the fair values provided by the underlying fund managers and their third-party administrators (‘Manager Value’). Unaudited valuations are generally provided to AIQ monthly /quarterly and the underlying funds are audited annually. The investment funds are largely illiquid and Warana believes that: a. it will likely take several years to fully receive liquidation proceeds; and b. if sold today, many holdings would be realised at discounts to their prevailing Manager Value. AIQ also makes investments in funds via the secondary market at a discount to the Manager Value. AIQ’s advisors have concluded that accounting principles require that these positions be written up to the Manager Value once the trade has settled. Thus, AIQ applies the Manager Value to all funds (including look-through funds) in calculating its NTA. It generally takes 6-8 weeks to receive the Manager Values from the underlying funds, which causes a similar lag in the inclusion in the AIQ NTA. When funds are acquired in the secondary market, they are often done so at a price that reflects Warana’s expectation that ultimate recovery will be lower than the Manager Value and that recovery will take several years (hence the purchase discount to Manager Value). As an additional resource for Unitholders, AIQ has included an Adjusted NTA calculated by AIQ’s Investment Manager to adjust for underlying funds that have been acquired in the secondary market (‘Secondary Funds’) at discounts to the Manager Value. It is intended as an additional indicative valuation resource given the re-valuation of Secondary Funds to Manager Value creates an immediate and significant valuation uplift. The Adjusted NTA is equal to the lower of the Manager Value and Warana’s estimate of the projected recovery cash flows discounted at a 10% p.a. rate. The Adjusted NTA is indicative only and there is no assurance the value will be achieved - unitholders should take care in relying on this metric as it is not produced or reviewed by a third party to AIQ. Neither Warana nor the Responsible Entity make any express or implied warranty as to the completeness or accuracy of any projections, market outlooks or estimates used in estimating the Adjusted NTA. The Adjusted NTA is estimated using third-party information and other assumptions which may prove inaccurate. Legal Notice Note: The Trust has conducted several capital raises to build scale since the recommencement of its investment strategy on 12 February 2018. It conducted a 1-for-1 rights issue in March 2018, a 1-for-1 rights issue in August 2019, a placement in March 2020, a unit purchase plan in April 2020 and offers a distribution reinvestment plan. As a result of the new units issued at discounts to the NTA in some of these events, the NTA was diluted. Returns under the “Diluted” columns for each relevant time period show the movement including the impact of the dilution. Returns under the “Undiluted” columns for each relevant time period show the movement adjusted for the impact of the dilution. “Since Inv. Strategy Restart (p.a)” returns are annualised returns since the investment strategy recommencement. “Since IM Appointment (p.a)” returns are annualised returns since Warana Capital was appointed as Investment Manager of AIQ on 9 October 2017. The first produced an Adjusted NTA for the period ending 31 October 2019. Adjusted NTA performance relative to periods before this date utilise the regular NTA. Past performance is not indicative of future performance. Historical NTA & Adj. NTA Performance NTA Adjusted NTA (See notes below) Diluted Undiluted Diluted Undiluted 1 Month -1.5% -1.5% -1.4% -1.4% 3 Months 4.6% 4.6% 0.4% 0.4% 6 Months 7.4% 7.5% 8.8% 8.7% YTD 19.0% 19.0% 18.0% 17.7% Since Inv. Strategy Restart (p.a.) 14.6% 14.2% 7.7% 7.3% Since IM Appointment (p.a.) 12.3% 12.1% 6.1% 5.9%
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