Nextgen Funds Management Pty Ltd has launched Australia’s first pure Artificial Intelligence (AI) Fund.
It will invest in domestic and international technology businesses which deliver AI technologies that address environmental, social, and industrial challenges globally.
The Fund, which is aimed at sophisticated investors, including HNWI, Family Offices and Institutional clients, will employ a mixture of debt and equity investments and maintain a diversified investment exposure across multiple industry sectors and growth stages ranging from early staged start-up through to pre-IPO. The fund will invest in a mix of both developed and new innovation to deliver A balanced risk profile. Says Samuel Mullavey, Head of Distribution at NextGen Funds Management: “The Fund’s key investment areas are where the adoption of AI will provide the greatest benefits economically, environmentally, and socially. These include sectors such as health and wellbeing, infrastructure and transport, environment and natural resources, cybersecurity, manufacturing, smart cities and buildings, and financial services.”
“The beauty of AI is that it permeates almost every industry sector, allowing us to add a layer of diversification which other thematic funds cannot offer.”
“The Fund aims to deliver appropriate risk-adjusted returns to Unitholders through a combination of capital growth and income generated from underlying investments in the rapidly expanding AI technology sector.”
“We believe AI will be the defining technology of our time and so we have positioned the Fund to take advantage of the exciting investment opportunities that are unavailable to public markets.”
“At NextGen, we look to invest in the good people & great ideas – all within an industry which is set for accelerated growth and demand. With innovative technologies, including AI, forecast to be worth AU$315 billion to the Australian economy by 2028 and AU$22.2 trillion to the global economy by 2030, AI represents a significant new opportunity to enhance economies both domestically and internationally.”
“As a result, there are unprecedented levels of global activity and investment in AI. Recent times have seen a total of AU$86 billion dedicated to AI programs and activities from 14 of the worlds most advanced economies. Locally the Australian technology industry will require up to 161,000 new expert AI professionals by 2030.”
“In many cases, the technology is there already, the real challenge many smaller AI firms face is in the commercialisation of their ideas into a viable product or service. We see this as a major opportunity within the AI space, one where we can leverage our strong partnerships, experience and networks, to provide the expert support that is required to navigate this tricky stage of development.”
“It was certainly important for us to be innovative in our offering. The funds agile strategy sees it remain both stage and sector agnostic, uniquely positioning it to capitalise on multiple cross-sector opportunities, with no floor or ceiling on deal size. What’s more important to us is that we invest at the rate and pace of AI innovation.”
While not guaranteed, the income yield objective of the Fund is 5% per annum with a total return objective of 13-15% per annum on an internal rate of return, pre-tax, post fees and costs.
Investments will be made in targeted opportunities, via individually structured arrangements with a preference to convertible notes but may also include private equity and debt funding such as secured loans. Convertible notes combine the downside protection of fixed income whilst also retaining the equity-like upside upon the conversion (done at a significant discount to market). This will be a major factor in reducing the risk in the portfolio, generating stable returns which can be passed onto our investors through our planned quarterly distribution and a strong return upon exit/conversion.
The Fund is an evergreen (open-ended) MIS designed with a three to five-year investment term in mind and a minimum initial investment of $100,000. Following the minimum initial investment, investors may invest additional funds in multiples of $50,000. A minimum balance of $100,000 needs to be maintained.
The all-important capital raising campaign has now begun, with a first round funding target raise of AUD $5m-$10m and upwards in capital (deployable immediately to pre-cleared AI Tech investments - growing to AUD $50m by the end of year 2) from a group of well aligned investors who would like to share in the unprecedented growth opportunity being presented by the rapid expansion of AI technology.
Fees are 1.65% p.a. exclusive of GST of Funds Under Management. A performance fee of 20% is charged above the Benchmark return of 7% and inclusive of pre-tax performance after management fees and other operating costs have been deducted.
Issued by: Samuel Mullavey – Director, Distribution and Investor Relations
NextGen Funds Management
03 9102 3313
0421 563 008