This article was recently published in the Financial Review on 26th February. 

“Hostplus adds to its venture capital portfolio” 

The benefits of having a young membership are on display again at Hostplus, the $22 billion industry superannuation fund that caters to workers in the hospitality sector. A young membership means Hostplus can afford to invest in projects where the pay-off is 15 years away or more. 

Hostplus is taking full advantage of its member profile by splashing some of its cash pile on venture capital, where the money ultimately goes to support start-up companies. In November 2015 Hostplus was talking about investing $400 million over the subsequent five years. Less than 18 months later, Hostplus has already invested more than $350 million in the sector and reckons it could easily inject up to a further $500 million over the next five years.

High illiquidity tolerance

Asked why the retirement fund was investing so much in venture capital, chief investment officer Sam Sicilia says (in addition to having a commercially minded board): “Because we can. We have a young membership demographic and have a high tolerance for illiquidity.”

Hostplus’ latest move is a $85 million investment in Artesian, a seed stage investment firm. Another two potential investments in the sector are due to go before the board next month and these come on top of existing investments in M. H. Carnegie & Co, Brandon Capital, Blackbird Ventures and Square Peg Capital, co-founded by Paul Bassett, who was also one of the founders of online recruiter Seek.
Artesian, which was spun out of ANZ Banking Group in 2004, says it has a unique approach. It partners with a raft of incubators, so-called accelerators, angel groups and university programs [including iAccelerate’s Seed Fund] to identify the most promising start-ups.
Artesian has the rights to make an initial investment and then to participate in subsequent capital rounds of capital raising.
Of Hostplus’s $75 million investment, $35 million will be used for the initial “spray” of money across a wide range of fledgling firms, with $45 million reserved for later financing rounds.

Continue reading the full article here…

Share this story:

Next Post