Aurora Funds Management, a third-party marketing firm, has linked with two funds managers to form a boutique diversified company which aims to list next month.
The new company, to be called Aurora Funds Management, will raise between $2 million and $5 million to fund an expansion of its research and marketing efforts.
Aurora, based in Sydney, will merge with Melbourne-based Sandringham Capital and Sydney-based hedge fund manager Fortitude Capital to form a business with about $570 million under management.
Aurora was formed in 2003 by a group of former Challenger International and other industry executives, to take other managers’ products to the retail sector, although this was subsequently widened to include institutional investors. It generally looks to list its associated funds and provides responsible entity and other services.
Sandringham was set up in 2005 by Steuart Roe, who will be chairman and chief executive of the new entity. The manager, which has a $206 million institutional mandate for global equities as its single biggest client, sub-advises on Aurora’s own offerings.
Fortitude is a well-regarded hedge fund boutique set up by John Corr in 2004. The firm won the “Hedge Fund of the Year Award” presented by the alternatives association AIMA in 2008 and 2009. It has about $60 million under management.
The trio’s financials looked good until the last six months when the effects of the global crisis bit. Total revenue rose from $5.2 million to $7.01 million between 2008 and 2009, with net profit up from $653,000 to $1.5 million. However revenue slumped to $2 million in the six months to December last and the three companies reported a loss of $396,000.
The share issue will allow a new float of between 10.3 per cent and 22.3 per cent, with unit holders in existing Aurora funds being offered first choice over the next two weeks.
Aurora’s growth in funds under management will be a key determinant of future revenue, the prospectus points out. It has about 3,600 investors in its funds to date. Its listed funds include the van Eyk Blueprint Alternatives Plus, for which Aurora raised the original capital.