CD Private Equity Fund I reported a $2.6 million net loss for the half-year ended 30 September 2025, driven by foreign exchange impacts and fair value adjustments, while distributing 8 cents per unit amid ongoing portfolio realisations.
- Net loss of $2.6 million, improved from prior year
- 8 cents per unit distribution paid to unitholders
- Three portfolio companies realised, returning US$3.37 million
- Net tangible assets per unit declined to $0.77 from $0.92
- Fund remains in harvest mode with 13 companies in sales pipeline
Financial Performance Amid Market Stabilisation
CD Private Equity Fund I (CD1) has released its half-year results for the period ending 30 September 2025, revealing a net loss of $2.6 million, or 7.13 cents per unit. This marks an improvement from the previous corresponding period's loss of $4 million. The fund’s performance reflects a complex interplay of stabilising private equity markets in the US and currency fluctuations that have impacted asset valuations.
During the half-year, private equity activity in the US showed signs of recovery as interest rates stabilised and corporate buyer confidence returned. Although deal volumes remained below long-term averages, transaction values increased, particularly in higher-quality assets. This environment supported selective portfolio company exits, which are crucial for CD1’s capital return strategy.
Portfolio Realisations and Distributions
The fund’s underlying managers realised three portfolio companies; GetixHealth, IDMWORKS, and EventLink; returning US$3.37 million to the limited partnership in which CD1 holds an 85.5% interest. These realisations enabled the fund to distribute 8 cents per unit to unitholders in October 2025, representing a significant return of capital during a period of cautious market conditions.
Despite these positive cash flows, the Australian dollar’s appreciation against the US dollar; from approximately US$0.62 to US$0.66; reduced the Australian dollar value of the fund’s US dollar-denominated assets. This currency movement contributed to a $1.7 million foreign exchange translation loss, which weighed on the overall net asset value.
Net Tangible Assets and Long-Term Returns
CD1’s net tangible assets per unit declined to $0.77 at 30 September 2025 from $0.92 six months earlier. Including distributions, the fund posted a total return of -7.6% on a post-tax net tangible asset basis for the half-year. However, the fund’s longer-term performance remains robust, with a post-tax annual return of 10.2% since inception and an internal rate of return of 11.5% per annum.
The fund continues to operate in harvest mode, focusing on realising value from its portfolio of 19 companies. Of these, 12 are actively driving value, five are impaired, and two are inactive. The sales pipeline is active, with 13 companies targeted for sale in 2025 and 2026, including five expected to conclude by June 2026, representing about 26% of the limited partnership’s investment value.
Strategic Outlook and Risk Considerations
The responsible entity and fund managers remain committed to a measured, asset-by-asset realisation strategy rather than a full portfolio sale, believing this approach best captures value for investors. However, this strategy faces constraints such as execution timing, fee impacts on residual investments, and ongoing market and currency volatility.
Deferred tax liabilities related to anticipated US tax obligations on realised gains continue to be factored into the fund’s financials, reflecting the complexities of cross-border private equity investments. The fund’s management fees and operating expenses remain modest, supporting efficient capital management.
Overall, CD Private Equity Fund I’s half-year results underscore the challenges and opportunities inherent in managing a US-focused private equity portfolio from Australia, particularly amid currency headwinds and evolving market conditions.
Bottom Line?
As CD1 advances its selective realisation strategy, currency fluctuations and market timing will remain key factors shaping investor returns.
Questions in the middle?
- How will ongoing US dollar strength affect CD1’s asset valuations and future distributions?
- What is the likelihood and potential impact of a full portfolio sale versus continued selective realisations?
- How might deferred US tax liabilities evolve as more portfolio companies are realised?