Artificial intelligence has been undergoing a boom, sending the valuations of companies such as Nvidia Corp (NASDAQ: NVDA) and Micron Technology Inc (NASDAQ: MU) through the roof.
Closer to home the data centre builders and operators such as Goodman Group (ASX: GMG) have been doing well.
But what if you want to invest more broadly across the sector, and also into private companies?
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Opportunity to invest at the ground level
That possibility is coming soon, with investment firm Pengana's AI Private Opportunities Trust (ASX: AIX) looking to raise $350 million in new funds ahead of a listing on the ASX.
The fund's prospectus says the focus is to give investors access to companies they otherwise could not invest in.
As they say:
We are pleased to announce the launch of the AI Private Opportunities Trust, which will offer you an opportunity to access a fund investing in the securities of private, non-publicly traded companies at all stages of development – from early-stage ventures through to late-stage, pre-IPO businesses – that are developing, enabling, or contributing to the adoption of artificial intelligence ("AI") and related technologies (which includes companies where AI is a key component to the value creation thesis for such companies).
The prospectus says the fund's proponents believe AI is increasingly proving its worth as a foundational technology, "with the potential to drive significant productivity gains, disrupt existing industries, and create new markets over the coming decades; and that it can present both an opportunity and a challenge for investors''.
They add:
The challenge is that a substantial portion of innovation and value creation in AI is occurring within private markets, where many companies are able to scale, iterate, and establish competitive advantages prior to seeking public listings. As a result, the Responsible Entity believes that public market investors are often left with only indirect exposure to AI, usually through large technology companies where AI represents only one part of a much broader business.
The trust will invest in private companies, the prospectus says, and also may selectively take part in initial public offers.
Strike while the iron is hot
They add that the timing of the trust's launch is fortuitous.
The Responsible Entity believes that it is a compelling point in the technological cycle to access these opportunities as many unlisted AI companies are maturing rapidly, and that over the medium term a number of these businesses are expected to transition into public markets via IPOs, be acquired, merge with other strategic players, or otherwise realise value for investors. While the Responsible Entity does not expect every Portfolio Company to pursue an IPO, the next five to seven years may provide an important window to access these companies before they become more broadly available to public market investors.
The initial portfolio on listing will include stakes in Bytedance and Handshake.
The Trust is offering units at $10 apiece with the general offer of units to close on 19 June, before trading starts, expected to be on 2 July.
