CD Private Equity Fund II reported a reduced net loss of $2.43 million for the half-year to September 2025, supported by $9.45 million in distributions from portfolio realisations. Despite foreign exchange headwinds, the Fund maintains a diversified portfolio and a positive long-term return track record.
- Net loss narrowed to $2.43 million from $8.34 million year-on-year
- Distributions of 18 cents per unit paid during the half-year
- Three portfolio companies realised, returning US$3.36 million
- Net tangible assets declined to $1.16 per unit amid AUD/USD currency impact
- Fund remains in harvest mode with 32 companies in portfolio
Half-Year Financial Performance
CD Private Equity Fund II (CD2) has released its half-year results for the period ending 30 September 2025, showing a significant improvement in its financial performance compared to the prior year. The Fund recorded a net loss of $2.43 million, or 4.63 cents per unit, a marked reduction from the $8.34 million loss reported in the same period last year. This improvement reflects a combination of portfolio realisations and more stable market conditions, although foreign exchange movements presented a notable headwind.
Portfolio Realisations and Distributions
During the half-year, CD2’s underlying managers successfully realised three portfolio companies, namely Ivy Technology, SMB Machinery Systems, and The Happy Planner, returning US$3.36 million to the Fund’s limited partnership. These realisations supported distributions totalling $9.45 million, or 18 cents per unit, paid out to unitholders across two payments in June and October 2025. The Fund remains firmly in harvest mode, focusing on selective exits to return capital efficiently while managing a diversified portfolio of 32 companies.
Currency Impact and Net Asset Value
The Australian dollar strengthened against the US dollar during the period, rising from approximately US$0.62 to US$0.66. Since the Fund’s investments are denominated in US dollars, this currency appreciation reduced the Australian dollar value of its assets, partially offsetting gains from portfolio activity. Consequently, net tangible assets (NTA) per unit declined to $1.16 from $1.39 at the previous reporting date. Despite this, the Fund’s long-term performance remains robust, delivering a post-tax annual return of 9.4% since inception.
Operational and Market Context
Market conditions in the US private equity space have shown signs of recovery, with stabilising interest rates and improved buyer confidence driving higher transaction values, particularly in technology and healthcare sectors. However, valuation disparities persist across sectors and vintages, underscoring the importance of experienced managers who can navigate these complexities. CD2’s managers continue to pursue a measured, asset-by-asset realisation strategy, with six companies currently marketed for sale and expected to complete transactions by mid-2026.
Outlook and Capital Management
The Fund closed the half-year with $8.58 million in cash and maintains a disciplined approach to capital management, aiming to maximise distributions to unitholders while managing deferred tax liabilities related to US investments. The Responsible Entity, K2 Asset Management Ltd, signals ongoing commitment to transparent communication and prudent portfolio management as the Fund navigates its harvest phase amid evolving market dynamics.
Bottom Line?
CD Private Equity Fund II’s improved half-year results and steady distributions highlight resilience, but currency volatility and realisation timing remain key watchpoints.
Questions in the middle?
- How will ongoing currency fluctuations impact the Fund’s asset valuations and future distributions?
- What is the timeline and likelihood of completing the current pipeline of portfolio company sales?
- Could the Fund consider a whole-of-portfolio sale to accelerate capital returns amid market uncertainties?