Acorn Capital NextGen Resources Fund

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overview

Investors in the Acorn Capital NextGen Resources Fund (the Fund) receive the following:

A diversified portfolio of Resources & Energy companies:

Acorn Capital (Acorn) will construct a portfolio of companies that are exposed to growth commodities in the Resources & Energy sectors. These companies will also cover the full range of development stages (i.e., explorers to producers) and include both listed and unlisted (e.g., pre-IPO) opportunities.

Investment management by Australia’s most experienced fund manager of microcap and emerging-growth companies in the Resources & Energy sectors:

Acorn is the pioneer of microcap and emerging-growth investing, and has maintained a specialist investment team for the Resources & Energy sectors since its inception in 2002. Investors in the Fund will benefit from nearly 20 years of institutional memory and sector learnings.

Strong fee alignment and capacity management:

A performance fee will only be paid if the Fund’s returns are above both the benchmark and 0%. In addition, Acorn will hard close the Fund at $100m, thereby preserving and optimizing return potential for existing investors

Daily Unit Pricing

Unit Price (Entry)
Apr 30 2021

1.2245

Unit Price (Exit)

Apr 30 2021

1.222

investment thesis

AN INVESTMENT STRATEGY DESIGNED TO CAPTURE THE INVESTMENT RETURNS ASSOCIATED WITH INVESTING IN RESOURCES AND ENERGY COMPANIES

WHY INVEST IN THE RESOURCES & ENERGY SECTORS NOW?

The global shift to low-carbon economies is reshaping the demand for the commodities used in energy storage, energy generation and the production of electric vehicles. Also, as the world emerges from COVID-19 lockdowns, major stimulus programs and ballooning government debt are impacting the price of commodities such as gold and silver. At Acorn, we believe the confluence of these factors, together with China’s transition from urban growth to urban consolidation, are creating the ideal conditions for a new Resources Supercycle.

WHY THE NEXTGEN RESOURCES FUND?

We believe the next Resources Supercycle will generate strong demand for commodities such as nickel, lithium, copper and rare earth elements, as well as gold and silver. For the experienced investor, microcap companies can provide attractive direct exposure to these commodities. However, to navigate the large and diverse universe of complex (and often poorly understood) geological systems that contain these metals requires deep financial and technical skills. The NextGen Resources Fund is supported by Acorn investment capability with these skills, which have been built over 20 years.

INVESTMENT OBJECTIVES

The fund aims to:

Provide a diversified portfolio of micro-, small- and mid-cap companies that are exposed to growth commodities in the Resources & Energy sectors
Outperform the S&P/ASX Small Resources Accumulation Index (the benchmark) over rolling 3-year periods

INVESTMENT STRATEGY

Initial desktop reviews use Acorn’s proprietary database to screen more than 1,300 companies, which collectively hold more than 6,700 underlying resources and energy projects. These results will be used to identify an initial group of attractive investment opportunities according to commodity type and stage of development (i.e., production, development or exploration).

The qualitative assessment of companies and their projects is the next important step in the investment process. This involves understanding a range of characteristics of the deposit(s) that may affect their suitability for economic development. Part of this review includes site visits and meetings with senior technical staff to investigate details behind resource estimations, mine plans, processing designs and issues related to environmental and government licensing, where applicable. Other factors considered are sustainability, competitive advantage (inclusive of ESG factors), industry position, capital needs, management, financial metrics and valuations.

The final step involves selection of the most-attractive investment opportunities. Portfolio construction and risk management will have regard to the exposure to individual commodities and the stage of development (i.e. Lassonde Curve) of the underlying companies.

Once invested, the Fund will contain an attractive mix of assets sourced from the entire investment universe yet will be diversified by commodity type and stage of development.

SUITABLE INVESTORS

The fund is suitable for wholesale* investors seeking:

Capital growth through a diversified exposure to Australian Microcaps
An active investment approach
A long term (5+ year) investment
A SIV compliant investment

*As defined by the Corporations Act

FOR FURTHER INFORMATION

For further information on the Fund contact Kate McDermott, Head of Distribution.

related Documents

Latest Commentary

Fund Factsheet

Fund Information Memorandum

Application Form

KEY FUND TERMS

Type Unregistered Unit Trust.

Objectives¹ Exceed the returns of the benchmark over rolling 3 years periods.

Benchmark S&P/ASX Small Resources Accumulation Index (XSRAI).

Investment Universe Australian Equities^1,2,3 up to 100%, Global Equities⁴ 0-25%, Unlisted Investments^5,6 0-15%, Cash 0-20%.

Stocks # 25-40.

Liquidity Daily.

Investment timeframe 3-5 years.

Distributions Annually.

Capacity $75m (soft)

Minimum Investment $50,000

Management fee⁷ 1.10%

Performance fee 20% of returns in excess of the benchmark.^8,9,10

Market capitalisation Minimum market capitalisation of $10m at the time of purchase.

Lifecycle stage risk guidelines Seed/startup 0-10%, Early 1^st stage 10-40%, Early 2^nd and 3^rd stage 10-20%, Expansion and Mature 1^st stage 30-70%, Mature 2^nd stage 0%.

Borrowing The fund is permitted to borrow up to 5% of NAV to apply to redemptions. Borrowings may not be used to leverage or gear the fund.

Shorting The fund is permitted to borrow up to 5% of NAV to apply to redemptions. Borrowings may not be used to leverage or gear the fund.The fund is long only. The fund is not permitted to short sell securities.

Trustee Acorn Capital Limited.

APIR Code ACQ3509AU.

Platforms Hub 24, Netwealth, Ausmaq.

1. Outside the ASXI 00 at the time of purchase. Up to 20% of the Fund’s net assets can be held in Australian companies that subsequently grow in the ASXIOO. Positions in ASX 100 companies must be sold within 18 months of entering the index.
2. Gold companies may comprise up to 60% Of net assets.
3. NO further purchases can be made in any company that exceeds 10% of the Fund’s net assets.
4. Global equities will only be included where gaps occur in the Australian market (e.g., quality silver
producers & explorers). Focus will be on TSX-listed stocks.
5. Positions will only be taken in Australian unlisted companies where a liquidity event (e.g., IPO or
trade sale) is likely within 6-12 months.
6. Unlisted securities may include equity and convertible notes.
7. Exclusive of expense recoveries of 15bp (excludes deal related legal fees and deal transaction costs).
8. Subject to prior Mark (HWM) being exceeded (no HWM resets allowed).
9. Subject to the Fund’s return also exceeding
10. Calculated after management costs and expense have been deducted.

ACORN CAPITAL’S TRACK RECORD OF SUCCESS AND INVESTMENT EDGE

The Fund’s strategy will allow it to access differentiated investment opportunities as compared to the S&P/ASX Small Resources Accumulation Index.

Acorn has significant experience investing in emerging growth companies.

ABOUT ACORN CAPITAL

STRONG &
DIVERSE DEAL FLOW

Powerful networks, industry access, team experience and limited competition.

LEADING
TEAM

Acorn has a large team with a strong investment track record. In house technical capability. A team that has been together for multiple years.

CAPABILITY
& FOCUS

Public & private market experience. Ability to access and assess investment metrics across listed and unlisted companies to identify opportunities and determine value.

Acorn Capital was established in 1998 as a specialist investment manager in emerging Australian companies. Acorn Capital distinguishes itself through its relatively large research and investment team with expertise across all industries, as well as its provision of expansion capital to developing companies.

Acorn employs the largest microcap / emerging companies investment team in Australia. The team comprises 10 investment management professionals with combined industry experience of 160 years.

CORE INVESTMENT TEAM

IMPORTANT NOTICE

This document is prepared, issued and furnished on a confidential basis to a limited number of sophisticated investors who are wholesale clients (as defined in section 761G of the Corporations Act). The information contained herein should be treated in a confidential manner and may not be reproduced or used in whole or in part for any other purpose, nor may it be disclosed without the prior written consent of the Acorn Capital Ltd. This document is being provided for preliminary discussion purposes only, in relation to certain prospective investment opportunities. It is not intended to be complete or definitive. Any information provided in this document is subject to and superseded by definitive documentation. Whilst the information contained in this document is believed to be reliable, its accuracy or completeness cannot be guaranteed, and no responsibility for the accuracy or completeness of such information is assumed by Acorn Capital Ltd or any other person furnishing this document. Past performance is not necessarily indicative of future results. There can be no guarantee that targets or objectives set out in this document will be met. Any financial product advice provided in this document is general financial product advice only, and does not take account of the objectives, financial situation or needs of any person.