CD1 (ASX:CD1) Key Facts

CD1 (ASX:CD1) of the CD Private Equity Fund Series, managed by K2 Asset Management Ltd, has shown resilience in the face of market challenges. The Fund has distributed A$75 million to Unitholders since July 2023, with several portfolio companies in the pipeline for sale and some already having signed Letters of Intent. The Fund's Gross Asset Value as of 31 July 2024 was A$38.1 million.

Executive Commentary

In early 2024, the US private equity market showed positive trends amid concerns about a growing backlog of assets, with the small to mid-size segment reflecting cautious optimism. A persistent valuation gap between buyers and sellers has slowed exit activity, resulting in a record low exit-to-investment ratio of 0.36x in Q1 2024, though Q2 saw an uptick with partial sales and minority stake rollovers. Private equity managers time their asset sales strategically to influence capital formation, distributions to limited partners, and future fundraising and performance. The CD Fund Series has demonstrated resilience despite market challenges, with recent improvements in exit activity and valuation multiples. Since July 2023, A$75 million has been distributed to Fund Series Unitholders, with several portfolio companies in the pipeline for sale and some already having signed Letters of Intent.

Summary and Outlook

The CD1 (ASX:CD1) Fund has exhibited strength in navigating market challenges, with a focus on distributing returns to Unitholders and actively managing its portfolio companies for potential sales. The Fund's commitment to returning capital to Unitholders as the underlying assets are realized underscores its self-liquidating nature. The recent improvements in exit activity and valuation multiples indicate a positive trajectory for the Fund. Looking ahead, the Fund aims to continue prioritizing communications to Unitholders and expects the realisation pipeline to grow over the next 12 months as wider market conditions improve and organic sales opportunities present themselves.