What does Reach Alternative Investments do?

What does Reach Alternative Investments do?

About Reach Alts

Reach Alternative Investments provides access to the world’s most exclusive institutional-grade private equity and private capital funds run by the world’s leading asset managers. Typically, the minimum investment into such funds would be at least US$10 million. Therefore, generally, these funds have only been offered to institutional investors or the ultra-wealthy.

For the first time in Australia, we are providing access to such funds for as little as $75,000. We do so by aggregating sophisticated investor demand to meet the minimum investment threshold. 

What’s special about private equity?

What makes private equity unique is its illiquidity, and the fund manager’s control and active participation. Unlike public equities, funds in private equity can be locked up for 10 years. This provides the fund manager a sufficient time horizon to implement an investment thesis and see its results.

Moreover, by taking a controlling interest in the underlying companies that comprise the fund, the investment manager can be an active owner, helping a company optimise its financial, governance and operating structures. They do this by utilising the fund manager’s expertise within the sector.

The reason Reach Alternative Investments wants to provide access is, because, quite simply, leading private equity funds have historically outperformed the public market. These funds have typically only been available to institutional investors and Australian sophisticated investors have missed out.

When we look at the research, whether by academics, benchmarking firms, or industry participants, we see private equity continue to outperform public market equivalents (McKinsey, 2001).  As noted by McKinsey:

"The most commonly accepted measure of private equity performance, public market equivalent …performance…finds that, of the 20 vintage years between 1996 and 2015, buyouts in only one vintage year (2008) have underperformed their respective public market equivalent return. This finding holds mostly true whether measured against the S&P 500 or the Russell 2000…" (McKinsey, 2001)

This performance has seen demand for private equity increase ten-fold since 2000, outpacing capitalisation in public equities by nearly threefold over the same period (McKinsey, 2001).

To date, it has been large institutions that have benefited from the performance and diversification that such private market funds provide. We want Australian investors to have the same opportunities. 

How do we provide access?

Reach Alternative Investments has managed to build a strong relationship with top-twenty global asset managers. These umbrella asset managers house numerous funds, run by some of the world’s leading fund managers. We work closely with the fund manager to select funds that meet our investment criteria. We consider (among other things):

- the proven expertise of the fund manager through their track record in the specific industry;

- the repeatability, diversity and understandability of the fund, so investors can decide for themselves whether these funds are right for them;

- the volatility of previous rounds or similar funds run by the fund manager; and

- the total investment amount and targeted returns.

Across the year, we curate a pipeline of funds to release to market. Our investors can log-in to our technology-enabled platform, view the details of each fund we offer, decide whether to invest in any one of our funds, sign all documents and receive reporting all through the same portal.

By aggregating sophisticated investor demand into individual unitised trusts, we can meet the minimum ticket size in order to access such exclusive institutional funds. We keep our structure simple, creating a one-for-one relationship between the underlying fund and the unitised trust, and outsource trustee and custodial services to a professional services company, to provide reassurance to our investors that they are exposed only to the underlying investment risk and not that of Reach Alternative Investments. 

Who is this for?

We provide access to ‘wholesale clients’, being sophisticated or professional investors in Australia (as defined in the Corporations Act 2001 (Cth)). Such investors will be able to access our funds for as little as AU$75,000.

What makes this unique?

What makes Reach Alternative Investments unique?

(a)  Access – we have access to some of the most exclusive institutional-grade funds, run by the world’s leading fund managers. Many of these funds have never been offered to non-institutional investors.

(b)  Credibility - we are solely focused on bring funds to market from the world’s leading fund managers. We are here to build a relationship for the long term with low fees and quality product. 

(c)  Independence - We are an independent distributor of institutional-grade funds on behalf of the world’s leading fund manager. We are not an asset manager, private bank or financial advisor. We see it as important to remain free and independent from any conflict of interest.

(d)  Adviser friendly – We are not here to cut advisers out of the investment process. We want to scale responsibly by integrating with financial advisers and planners in order to allow advisers and planners to assist their clients to better understand these investment opportunities and consider whether they are right for them. Advisers form a crucial part of the investment landscape in Australia.

(e)  Liquidity – While many of these products are illiquid and investors need to invest with that in mind, we understand that unlike institutions there may be extenuating circumstances that mean our investors may need to get out of an investment (perhaps due to death or divorce). Therefore, while we do not guarantee liquidity, we provide community-led liquidity windows during select times in the life of the fund to allow for the potential for an investor to either exit or increase their ho

Investor experience

We provide our customers the ability to invest in private equity through an end-to-end digital experience.

How does it work?

Our secure technology platform provides for an end-to-end digital experience allowing our investors to log-in, become verified (sophisticated investor and anti-money laundering checks), view the details of our exclusive funds including communication with the fund manager, sign all documents, invest in a fund, and receive reporting on the fund performance all within the same platform.

Our platform provides an easy-to-use, secure and complaint process to make investing in private market funds simple:

Sign-up:

Our sign-up process is quick and user-friendly, we require the provision of identification details, verification of user credentials and self-authentication of sophisticated investor status.

Investment catalogue:

Once signed-in, an investor will be able to browse the investment catalogue. This catalogue provides a high-level summary of each of the funds we have open for investment.  

Onboarding process:

Prior to viewing the data room for each open fund (i.e. the detailed information relating to each fund), investors must complete an onboarding process. In compliance with Australian law, all our investors must complete the ‘know your customer’ requirements (i.e. anti-money laundering & counter financing of terrorism checks) to be authenticated for an to invest on the platform. In addition, each investor must provide proof of their sophisticated investor status prior to being able to invest.

Investment details

Once the onboarding process is complete to the satisfaction of our professional trustee, the investor may browse the detailed information relating to each fund. This will include communication from the fund manager, education materials and the information memorandum. This is to assist the investor, and their adviser, to consider whether the investment is right for them.

Invest

If, having considered an investment, the investor believes that it is right for them they can complete the investment process through the platform, including signing all fund documents. Once the investment money has been sent to our Australian-based custodian, the units in the trust will be issued to the investor.

Reporting

At anytime, the investor can check their investment dashboard for details on the performance of the funds they have invested in. 

Key benefits to investors

Low minimum investment

By aggregating demand our clients will be able to invest in institutional-grade funds for as little as AU$75,000. We keep our fee structure low in order to minimise the impact on the performance of the fund.

Digital experience

We are a complete end-to-end digital investment platform. We take a paper-based process that currently takes weeks and turn it into a shorter digital experience.

Education

We partner with fund managers and industry players to deliver high quality educational content, packaged in an interesting and enjoyable way.

Liquidity

We have twice-yearly liquidity windows where our customers can exit if needed and other customers can 'top-up' their holding.

If you have any questions about what we do, or how you can gain access, please reach out.

References:
McKinsey Global “A year of disruption in the private markets: Private Markets Review 2021” (April 2021), pages 20 - 21.
The information in this article has been compiled from sources we believe are reliable. We make no warranty, express or implied, regarding accuracy, adequacy or the completeness of the information in this report. We provide this information on an ‘as is’ basis. This disclaimer applies to isolated and aggregate uses of the information. Information can also become out of date fairly quickly. If you have obtained this information from a source, other than from Reach Alternative Investments, please consider it carefully as electronic data can be altered subsequent to original distribution. Please contact us immediately if you think that may be the case. Always remember that all investments carry risk. You may lose or gain money. Past performance is also not indicative of future performance. Before making a financial decision, you should read the relevant Information Memorandum.

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