Startup investor Blue Sky placed into receivership following “significant instability”

Blue Sky

Elaine Stead, head of venture capital at Blue Sky.

Australian alternative asset manager Blue Sky has been placed into receivership, and voluntary administrators have been appointed, after it breached the covenant of a $50 million loan facility from Oaktree Capital Management.

Oaktree has enforced its rights under the loan facility and appointed Mark Korda and Jarrod Villani of KordaMentha as receivers and managers of Blue Sky.

Bradley Hellen and Nigel Markey of Pilot Partners have also been appointed as voluntary administrators.

With $2.8 billion in assets under management, Blue Sky manages real assets and private real estate, alongside its private equity arm, which makes growth capital and venture capital investments.

The news follows Blue Sky’s breach of the Oaktree loan facility, announced earlier last month.

A statement from KordaMentha said it follows a period of “significant instability” including the possibility of class actions, turnover of senior executives, and departure of limited partners.

“There is considerable work to be done in the near future,” the release said.

“This appointment is necessary if Blue Sky is to maintain its investment teams, key clients, and stabilise the operations and capital structure of the business,” the statement said.

In the statement, KordaMentha partner Mark Korda said the initial objective is to “stabilise the business as a strategic assessment is undertaken”.

Day-to-day operations will not be affected, he said.

“It will also allow greater flexibility for the restructure of Blue Sky and seek to ensure the future of the business,” Korda added.

In April last year, Australian head of VC Elaine Stead stepped down as a board member at Blue Sky, following an attack from US short-selling firm Glaucus.

The previous month, Glaucus had published a report suggesting Blue Sky’s investments were valued at $1.5 million, significantly less than the $4 million the company valued them at.

ASX-listed Blue Sky commissioned an independent review of its business processes, but since then its share price has tumbled, from an all-time high of $14.99 to $0.18 at last close.

As of this morning, shares have been suspended.

One of Blue Sky’s high-profile investments was customised fashion startup Shoes of Prey, which collapsed into liquidation in March this year. At the time, investors in the business were tipped to lose $35 million.

Elaine Stead and Blue Sky declined to comment.

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