NextGen Funds Management Pty Ltd has launched Australia’s first pure Artificial Intelligence (AI) Fund. It will invest in domestic and international technology businesses which deliver AI technologies that address environmental, social, and industrial challenges globally.
The Fund is aimed at sophisticated investors, including high net worth individuals, family offices and institutions. It will invest in a mixture of debt and equity and will maintain a diversified investment exposure across multiple industry sectors and growth stages ranging from start-up to pre-IPO. This includes a mix of developed and innovation in order to balance the risk profile.
Says Samuel Mullavey, Head of Distribution NextGen Funds Management: “The Fund’s key investment areas are where the adoption of AI will provide the greatest benefits economically, environmentally, and socially. These include sectors such as health and wellbeing, infrastructure and transport, environment and natural resources, cybersecurity, smart cities and buildings, and financial services.
“We believe AI will be the defining technology of our time. It is set for accelerated growth and demand and, as such, we have positioned the Fund to take advantage of the exciting investment opportunities unavailable to public markets.
“The Fund aims to deliver appropriate risk-adjusted returns to unitholders through a combination of capital growth and income generated from underlying investments in the rapidly expanding AI technology sector.
“With innovative technologies, including AI, forecast to be worth AU$315 billion to the Australian economy by 2028 and AU$22.2 trillion to the global economy by 2030, AI represents a significant new opportunity to enhance economies domestically and internationally.
“As a result, there are unprecedented levels of global activity and investment in AI. In recent times we have seen a total of AU$86 billion dedicated to AI programs and activities from 14 of the world’s most advanced economies. Locally the Australian technology industry will require up to 161,000 new expert AI professionals by 2030.
“In many cases, the technology is already available, but the challenge many smaller AI firms face is commercialising ideas into a viable product or service. This as a major opportunity to leverage our strong partnerships, experience, and networks, and provide the expert support required to navigate this tricky stage of development.
“We set out to be innovative in our offering and as such, the Fund’s agile strategy is to remain stage and sector agnostic so it can capitalise on multiple cross-sector opportunities and keep pace with changes in AI innovation.”
The NextGen Artificial Technology Fund has no floor nor ceiling on deal size.
While not guaranteed, the income yield objective of the Fund is 5% per annum with a total return objective of 10-12% per annum on an internal rate of return, pre-tax, post fees and costs.
Investments will be made in targeted opportunities, via individually structured arrangements that may include convertible notes, private equity, and debt funding such as secured loans.
The Fund is designed with a three to five-year investment term in mind and a minimum initial investment of $100,000. Following the minimum initial investment, investors may invest additional funds in multiples of $50,000. A minimum balance of $100,000 needs to be maintained.
Fees are 1.65% p.a. exclusive of GST of Funds Under Management. A performance fee of 20% is charged above the Benchmark return of 7% and inclusive of pre-tax performance after management fees and other operating costs have been deducted.