Rising Geopolitical Risks Test CD Private Equity Fund III’s Strong FY25 Gains
CD Private Equity Fund III reported a remarkable 726.6% jump in net profit to $18.56 million for FY25, driven by strong fair value gains and portfolio realizations. The Fund declared a $0.20 per unit distribution amid ongoing geopolitical and market challenges.
- Net profit soared 726.6% to $18.56 million in FY25
- 14.5% total return on post-tax net tangible assets
- Distributions of $14.41 million paid, $0.20 per unit
- 71.2% interest in US Select Private Opportunities Fund III, LP
- Robust portfolio realizations from eight underlying companies
Strong Financial Performance Amid Market Headwinds
CD Private Equity Fund III (CD3) has delivered a standout financial year ended 31 March 2025, reporting a net profit of $18.56 million, a staggering 726.6% increase from the prior year’s $2.24 million. This surge was primarily driven by a $17.34 million fair value gain on its investment in the US Select Private Opportunities Fund III, LP (LP), reflecting strong underlying portfolio performance and favourable foreign exchange movements.
The Fund generated a total return of 14.5% on a post-tax net tangible asset (NTA) basis, underscoring its ability to navigate a complex investment environment marked by geopolitical uncertainty and fluctuating deal volumes in the US private equity market.
Portfolio Realisations and Distributions Support Investor Returns
During FY25, CD3 paid distributions totaling $14.41 million, equivalent to 20 cents per unit, funded by proceeds from the successful realisation of eight underlying portfolio companies. These exits spanned resilient sectors such as technology, healthcare, and industrial chemicals, with notable transactions including the sale of Visual Lease to CoStar Group and Shrieve Chemical’s operational expansion under Gemspring Capital.
Despite ongoing macroeconomic headwinds, including tariff impositions and cautious fundraising conditions, the Fund’s portfolio companies demonstrated resilience and growth. The Fund ended the year with net assets of $134.96 million, or $1.87 per unit, maintaining a strong capital base supported by $10 million in cash and uncalled capital commitments of $5.7 million.
Investment Strategy and Governance
CD3 holds a 71.2% interest in the LP, which invests across 13 underlying US private investment funds focusing on small-to-mid-market companies. The Fund’s strategy emphasizes capital growth over a medium to long-term horizon, leveraging partnerships with experienced managers to identify high-quality opportunities.
Governance remains a priority, with K2 Asset Management Ltd as Responsible Entity overseeing risk management, compliance, and transparent communication with unitholders. The Board comprises a mix of independent and non-independent directors, supported by an independent compliance committee to ensure robust oversight.
Outlook and Market Considerations
Looking ahead, the Fund acknowledges the persistent uncertainties in global markets but remains optimistic about the ability of private equity-backed companies to thrive amid dislocation. The Manager anticipates continued maturation and realisation of portfolio companies, aiming to sustain distributions and capital growth as market conditions permit.
Investors are encouraged by the Fund’s demonstrated adaptability and disciplined capital management, positioning CD3 well for the challenges and opportunities of FY26.
Bottom Line?
CD Private Equity Fund III’s robust FY25 results set a confident tone for navigating ongoing market uncertainties and unlocking future value.
Questions in the middle?
- How will ongoing geopolitical tensions impact future exit opportunities and valuations?
- What is the Fund’s strategy for managing foreign exchange risk given its US dollar exposure?
- How might performance fees influence net returns and distribution timing going forward?
