Under-the-radar NZ global equities boutique, Elevation Capital, is set to embark on a retail distribution and product expansion as the owners of online trading platform, BlackBull Markets, enter the share register.
Eden Bradfield, BlackBull head of research and newly minted Elevation co portfolio manager, said the group expected to find a ready retail client base among his more than 9,000-strong newsletter audience.
Bradfield said the “newsletter and its subscriber numbers was the genesis of this transaction” with readers pushing for fund-packaged access to his portfolio musings.
“I’m thrilled many of my readers are coming alongside me to invest,” he said, noting plans to “broaden distribution across the board” for the historically wholesale-leaning Elevation.
The manager reported just $175 million under management in April, mostly housed in discretionary portfolios overseen by Elevation founder, Christopher Swasbrook.
Elevation lost a long-standing global equities mandate with the Eastern and Central Community Trust last year, valued at about $52 million when terminated.
According to disclosure documents, the Elevation Global Shares Fund portfolio investment entity (PIE) reported about $25 million under management and 145 investors as at the end of March this year.
The global equities PIE – known as the Elevation Capital Value Fund until August 2019 – is the sole retail product offered by the manager but that would change shortly, Bradfield said.
“We cannot be specific at present but [the planned new funds] are very exciting, and we’re looking forward to sharing them with the market soon,” he said.
Bradfield now owns 2.5 per cent of the restructured Elevation in a deal finalised earlier this month that saw BlackBull founders, Michael Walker and Selwyn Loekman, take almost 40 per cent of the funds management firm established by Swasbrook in 2006 for an undisclosed price.
Delta Insurance head, Ian Pollard, and independent direct, Teresa Pollard, bought 26.5 per cent of the company while Swasbrook retains 16 per cent (and stays on to manage his wholesale clients). Elevation director, Sam Thackery, and BlackBull trader, Dylan French, also came aboard as minority shareholders in the new Elevation Capital Funds Management entity.
Other small shareholders in the predecessor Elevation entity, including Financial Markets Authority (FMA) chair Craig Stobo, exited the business last year. Stobo was also previously Elevation chair.
Swasbrook (also an FMA director) serves with Stobo on the board of the Auckland Future Fund, currently in the throes of awarding a $1.3 billion mandate to a global investment provider.
Since inception in December 2008 to the end of March this year, the Elevation PIE has returned an annualised 6.53 per cent net compared to 7.54 per cent for its absolute return target of NZ consumer price index plus 5 per cent.
The value-oriented strategy remains almost 3 per cent above-benchmark for the five-year period but below target to the tune of close to 12 per cent over the 12 months to March 31.
While Bradfield brings his own style to Elevation he said there would be “no change in strategy”.
“I always think value is a kind of misnomer though – really all intelligent investing is value investing – you want to buy something high quality at a good price. You want to buy something worth more than what you pay.”
The newly released Elevation product disclosure statement shows the fund carries a total annual cost of 1.81 per cent (down from more than 1.9 per cent, previously), comprising 1.27 per cent management fee and 0.54 pe cent for administration.
Elevation reported an operating loss of about $54,000 over the 12 months to March 31 last year on revenue of just over $1 million. The company embarked on a substantial restructuring in the financial year, which resulted in a reported loss of $2.3 million on the sale of shares in Bethunes Investment – a company associated with Swasbrook – as its asset base declined from $5.12 million to $1.31 million. Most of the firm’s assets transferred to the Elevation Capital Funds Management entity last October.
The ownership change effectively gives BlackBull access to a managed investment scheme licence to add its derivatives issuer credentials issued in 2020. Another long-standing NZ funds boutique, Castle Point, saw its licence transferred to Perpetual Guardian last year following a full buy-out.
Established in 2014, BlackBull has seen rapid growth as global online trading platform, offering investors access to a wide range of securities including contracts for different, crypto, forex, commodities and shares.
The business has attracted some NZ funds management luminaries including Brook Asset Management co-founder, Simon Botherway, and Milford Asset Management.
Botherway joined the BlackBull board as chair in 2023 after taking a small stake in the firm: Milford bought 20 per cent (via one of its private equity vehicles) in BlackBull in the same year.