Acorn Capital Investment Fund Limited (ACQ) offers investors something different. The focus of ACQ is on listed and unlisted Emerging Companies or “microcaps”. This is a segment of the Australian investment market which is generally under-researched and under-represented in investor portfolios. ACQ gives investors exposure to investments that have the potential to provide substantial capital appreciation over the long term.
Investment in ACQ is available to all types of investors and may be of particular interest to retail investors, those who have a Self-Managed Super Fund (SMSF), to family office portfolios and especially to those investors wanting to participate in supplying capital to Australian entrepreneurs who manage unlisted companies.
Investors in ACQ may benefit in the following ways:
Access – The ACQ investment strategy is to supply capital to listed and unlisted Emerging Companies/Microcaps. This provides access to a capital market that is difficult for individual and SMSF investors to access directly, particularly through a single diversified portfolio.
Diversification of portfolio – As at 30 June 2017, approximately 2,000 companies were listed on ASX. A large or small cap portfolio of companies will only provide access for an investor to the largest few hundred of these companies. It is estimated that there are over 15,000 non controlled large proprietary or unlisted public companies in Australia. Investors in ACQ gain exposure to these unlisted and smaller listed company segments, providing diversification benefits to investors who may otherwise find it difficult to gain access to such companies.
“Jobs growth in Australia is generated by firms of all ages and sizes but it is young firms, particularly high growth start-ups that are the engine of employment growth”
‘The employment dynamics of Australian entrepreneurship’ (September 2015)
Office of the Chief Economist, Department of Industry and Science
Support of Australian growth and employment –An investment not only supports companies that innovate, drive productivity and efficiency, but also contributes to Australian growth and employment.
Involvement in Australia’s funding vehicle for entrepreneurial capital – An investment in ACQ provides exposure to Australia’s entrepreneurs and next generation of corporate success stories. Through an investment in ACQ shareholders have the opportunity to “get in early” on the stories of growing Australian companies.
Experienced and successful senior investment team who can identify the best investment opportunities – ACQ is managed by Acorn Capital, the pioneer of microcap investing in Australia. An active research-driven investment manager, Acorn Capital’s experienced team has a tried and tested active approach of bottom up stock picking as well as sector analysis and thorough valuation techniques that are applied to the assessment of investment opportunities. The research process is vigorous and regular company interaction is undertaken.
Investment in ACQ by management – Directors and staff of both Acorn Capital and ACQ are substantial investors in ACQ. Investing their own money shows a commitment and capability to follow their mandate.
Risk management – Risk and its management is a focus throughout the investment process of ACQ. The Acorn Capital team manages risk through the creation of diversified portfolios. In addition, quality of risk systems and reports are managed by an independent audit, risk and compliance committee. All board members have strong experience in capital markets and corporate governance.
Dividends –ACQ intends to pay dividends targeting at least 3% of closing post-tax 30 June NTA for the immediately completed financial year franked to the highest extent possible (subject to sufficient profits and liquidity to facilitate dividend payments). Information on the latest dividends can be found here.
Transparency and ease of investment – As an LIC, ACQ affords an ease of investment and divestment. Individual investors may provide a buy or sell order via their broker to the ASX as they would any stock. LICs also offer investors a high degree of transparency, as they are held in a simple structure governed by the ASX’s corporate governance and reporting requirements. LICs are structured to maximize tax effectiveness and frequency of dividend payments with franking credits attached. LICs are ‘closed end’ in nature, meaning they are not ‘forced sellers’ to meet the withdrawal demands of investors.
Differentiated offering and attractive valuation designed to maximise shareholder returns – ACQ provides access to both listed and unlisted microcaps. Through ACQ, its shareholders can support both listed and unlisted Emerging Companies. Such an investment, in particular in the unlisted venture capital sector, is not typically available to individual investors.
A slice of Venture Capital and Private Equity – traditionally, the focus of Australian Venture Capital has been in Information Technology and Telecommunications, and Healthcare and Biotech. ACQ invests in these sectors, but also sees innovation across all sectors of the Australian economy. Acorn Capital sees success stories in multiple industries and don’t see why Australian investors should be restricted by industry when investing in venture capital.