Powerhouse Ventures partners with European fund manager

ASX-listed Powerhouse Ventures has partnered with an unnamed European fund manager that will commit US$50 million to its fledgling Critical Infrastructure Opportunities (CIO) Fund.

Powerhouse signed a memorandum of understanding (MoU) with the European manager in a bid to expand the CIO Fund, aiming for at least US$100 million in total commitments.

The European manager is expected to anchor the fund with US$50 million in limited partner capital, subject to definitive agreements.

The fund is set to formally launch in the September quarter under the co-managed arrangement, which sets outs equal representation for both parties on the investment committee.

The CIO Fund targets advanced technology companies that operate in space, quantum, artificial intelligence and advanced materials.

Powerhouse said the fund that "will not be a long-duration, speculative start-up fund," rather its target companies will "fast become the next 'infrastructure' layer that western sovereign nations will need to develop for capability and resilience."

The fund has seeded about 10 global companies. The total initial commitments come to about $13 million.

"The commercial advantages of a co-managed structure include more immediate scale and FUM, even after sharing, as well as providing our investment thesis with a more global footing so as to enable us to leverage combined deal flow, domain expertise and capital markets execution capabilities," Powerhouse said.

The co-managed CIO Fund, which officially launched in May under subsidiary Powerhouse Venture Partners, will soon transition into a feeder structure for Australian investors. It is currently under an Australian corporate collective investment vehicle (CCIV).

"We believe that the current Goldilocks stage for private technology investing is not the Australian seed or early stage but rather is the financing rounds that are immediately ahead of institutional support or listing with respect to companies that have globally relevance," Powerhouse said.

"Access to these sorts of technologies and investment opportunities in the Goldilocks stage is not easy, however. Opportunities are either extremely crowded out or extremely under-appreciated, depending on the short-term hype behind the technology. Generalist portfolio managers tend to "chase their tails" as a consequence."

Powerhouse took over small-caps focused Aliwa Funds Management in 2024.