8IP’s future hangs in the balance after insto client walks

afr.com:

It’s dark days at Eight Investment Partners, with the $300 million Brisbane small-cap boutique considering its options after suffering a large institutional mandate redemption.

Sources told Street Talk that the redemption was between $200 million and $250 million and had resulted in a round of redundancies.

Steve Walsh and Kerry Series of Eight Investment Partners. Dominic Lorrimer

“We’re not shutting down, we’re rethinking the business… looking at other potential models for the business,” 8IP’s chief investment officer, Stephen Walsh, told Street Talk on Tuesday. “Nothing is decided yet.”

It’s hard to see how the business can keep the lights on if it’s managing $50 million to $100 million. It would have only two options on the table – wind down the funds and return money to investors or hand over management to another fund in exchange for a cut of the fees.

8IP was founded by Perennial Investment Partners co-founder Kerry Series in 2009 and attracted the talents of former Macquarie banking analyst Stephen Walsh. Some of its early winners included online recruiter 1-Page – which it initially bought at 20¢, riding it all the way up to $4.50. It became Morningstar’s top-performing fund over the six and 12 months to July 2014.

The business came under attack from Aurora Funds Management – the company with ties to activist Nick Bolton – in 2018, which called for three directors of its 8IP to be replaced. Aurora, which controlled just under 20 per cent of 8IP Emerging Companies, the $50 million listed investment company managed by 8IP, cited the fund’s trading discount relative to its assets and its investment strategy as reasons for the board overhaul.

Aurora also criticised 8IP’s position in collapsed technology stock Big