Embattled fund manager Blue Sky Alternative Investments (ASX: BLA) has been dropped by the South Australian government from its role of managing the state's venture fund.
The independent committee in charge of the $50 million SA Venture Capital Fund (SAVCF) is in the process of appointing a new fund manager to oversee the investments of the money.
Blue Sky was first selected to manage the $50 million fund in July 2017 and tasked to work alongside local businesses to identify high growth potential SA companies for investment.
The independent committee, chaired by SA businessman Raymond Spencer, has dropped Blue Sky in the wake of its collapse into administration.
Blue Sky's tortured history came to a head in May this year after a year of bad results, board spats and class actions.
A failed rescue deal from Oaktree Capital Management comprised of a $50 million secured loan facility was the final nail in the coffin. After Blue Sky was unable meet the loan conditions the investment group had no choice but to push the Brisbane group over the edge.
The Brisbane-based company appointed KordaMentha as its receiver and manager on 21 May, 2019.
According to the state government Blue Sky's receivers have indicated to the SAVCF management committee that Oaktree has no interest in the venture capital component of the Blue Sky business.
According to the South Australian treasurer Rob Lucas the SAVCF will continue to operate with the Blue Sky team managing the fund but as employees of a new yet-to-be appointed fund manager.
"I am advised the team has continued to manage the SA Venture Capital Fund effectively - notwithstanding the events that have impacted its parent company over the past year - and has met all its obligations under the terms of the management agreement," says Lucas.
"In the past two years they have evaluated more than 350 investment opportunities and actively manage $6 million into three investments in the fund (Myriota, Kid Sense and Fivecast Pty Ltd) leveraging a further $18.1 million in private sector capital."
"The independent SAVCF management committee expects this level of activity to continue."
Mr Lucas said the management committee will engage in an Expression of Interest and Proposal process to select a new venture capital fund manager to mange the SA Venture Capital Fund with the preferred model being to retain the existing local BSVC team.
Business News Australia
Get our daily business news
Sign up to our free email news updates.