The $10 billion Telstra Super has become a seed investor in a domestic bioscience manager through an ‘incubation portfolio’ within its allocation to Australian equities.
The fund has committed $10 million to Melbourne-based Intersuisse Bioscience Managers (IB Managers), the Australian arm of UK firm Bioscience Managers Limited, to be invested in the IB Australian Bioscience Fund I. Telstra Super is one of four seed investors in the product. “The driving motivation is return, to reserve some capacity in the future and hopefully obtain a highly competitive fee,” Dan Farmer, Australian equities portfolio manager with Telstra Super, said. “Boutiques have some niche plays.” The IB fund invests primarily in listed or private life science companies in the mid-stage phase of their development. “They are in or near the clinic stage, where they are either about to or or are being tested on humans,” Matt McNamara, general manager of the IB fund, said. Farmer said that biotech stocks held substantial “upside potential” even though they had been sold-down heavily during the year. IB Managers is also an advisor to bioscience companies aiming to commercialise their products. Earlier this year, Telstra Super made its first investment through the incubation portfolio when it seeded the LGI Absolute Return Fund, an Australian equity long/short fund also run from Melbourne, with $20 million. The portfolio was set up in 2007 to enable the fund to access early-stage Australian equities managers through mandates ranging between $10 – $20 million. In time, the incubation portfolio could grow to occupy 5 per cent of the fund’s overall allocation to Australian equities, Farmer said. “Since some of these strategies will have reasonably limited capacity, if they take off, capacity could become an issue for us. “Hopefully they’ll grow and we can grow with them.”
Future Fund chief investment officer Ben Samild said that FY24 has been a great year for alpha creation, thanks to strong returns in equities and, unusually, across multiple hedge fund strategies all at the same time. He reflected the past few years have been “a difficult time to be an asset owner and to generate positive returns for risk assets” but the Future Fund is tracking well of its long-term mandate.
Simon Hoyle and Darcy SongSeptember 4, 2024
