Has been very tough in microcaps - was a good performing fund for quite a while. The IPO market has to be reopen soon - imagine there'll be some pretty good ones at this time of the cycle too.

Source: Bombora’s fund feels the heat of shut IPO markets; redemptions frozen (afr.com)

Mike Hill’s Bombora Investment Management froze redemptions from its main fund last year, as funding markets remained shut for pre-IPO companies and its listed bets underperformed.

In September, investors in the Bombora Special Investments Growth Fund were told they couldn’t make withdrawals, with the change applied retrospectively from July 1. Bombora plans to review the arrangements in March, but the freeze is expected to stay in place until June or a total of 12 months.

The fund has 20 investments, including at least six IPO candidates in edtech Pathify, accounting software business Ezy Collect, gaming stimulator Orbx, video content technology play 90 Seconds, Aussie Plant Based Food and LVX Global.

In addition to pre-IPO names, there’s a circa 20 per cent allocation to listed names like pet care marketplace Mad Paws (down 42 per cent in 12 months), edtech Janison (-53.57 per cent), healthcare software player Beamtree Holdings (-29 per cent) and customer engagement software business Gratifii (-60 per cent).

Put it all together, and Bombora is pegging a $125 million net asset value to the fund and a circa 50 per cent annual growth rate to its underlying companies. Returns at September end were 10.1 per cent on a CAGR basis since it kicked off in 2018.

Redemption freezes were a red-hot issue for property funds last year, but Bombora is the first pre-IPO fund with similar symptoms to cross Street Talk’s desk. This column, last year reported MA Financial’s $1.47 billion Redcape Hotel Fund’s decision to freeze redemptions, followed by a similar move at Dexus’s $2.3 billion Wholesale Australian Property Fund.

To its credit, several of Bombora’s peer funds at the likes of Regal, Ellerston, CVC and Perennial are closed-ended, meaning investors can’t lob redemption forms until the end of fund’s life in seven or 10 years. At the bigger end of the town, venture capital firm Square Peg’s latest reporting shows how it struggled to hit even one exit in 2023 and has a large chunk of its performance tied up in paper profits.