Blue Sky is reviewing how it determines the valuations of its fee-paying assets under management

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  • Blue Sky announces an independent valuation review of every asset.
  • It will separately report one-off upfront management fees and ongoing annual management fees in all future annual reports.
  • The funds manager has also provided a detailed analysis asset exits over the last five years.

Blue Sky, the funds manager under attack by a short seller who alleges that assets under management are overvalued, has announced an independent review to improve transparency and clarity of fees and performance.

John Kain, chairman of Blue Sky Alternative Investments, says the board of directors wants to ensure the company is meeting market expectations.

Actions announced by Blue Sky include:

  • Greater clarity of the breakdown of fee-earning Assets Under Management (AUM), including by asset class as well as the principles for measuring fee-earning AUM.
  • Separately reporting one off upfront management fees and ongoing annual management fees in all future annual reports.
  • Greater transparency on its investment performance through releasing a detailed analysis of each of Blue Sky’s exits over the last five years.
  • Commissioning an independent valuation review of every asset.

Blue Sky shares have more than halved this month since Glaucus Research announced it was shorting Blue Sky, alleging the funds manager wrongly calculated the value of assets under management and charged exorbitant fees.

Blue Sky rejected the allegations and referred the Glaucus note to the corporate regulator ASIC, saying this could be a case of market manipulation.

A short time ago, Blue SKy shares were down another 22.5% to $4.06. Less than a month ago, they were trading at $11.90.

The independent review announced today which will examine Blue Sky’s risk management framework, its valuation processes, financial reporting processes and other disclosures.

“Market sentiment indicates that we do need to change, that’s the simple reality of life and we need to embrace it,” Kain told analysts in a briefing today.

The company expects the independent valuation review of every asset to be completed by the end of the financial year.

Blue Sky also today released additional information about the breakdown and the principles of AUM and an analysis of the exits of investments over the last five years.

Here’s how Blue Sky explains its fee-earning AUM breakdown:

Source: Blue Sky

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