CD Private Equity Fund III reported a $3.02 million net loss for the half-year ending September 2025, driven largely by foreign currency translation losses, yet maintained a 10 cent per unit distribution supported by portfolio realisations and cash management.
- Net loss of $3.02 million primarily due to foreign exchange translation loss
- Declared and paid 10 cents per unit distribution to unitholders
- Fund’s net tangible assets per unit decreased to $1.73
- One portfolio company realised, returning US$1.78 million
- Long-term post-tax annual return remains strong at 13.2% since inception
Financial Performance Amid Market Stabilisation
CD Private Equity Fund III (CD3) has released its half-year results for the period ending 30 September 2025, revealing a net operating loss of $3.02 million. This outcome was largely influenced by a significant foreign currency translation loss of $7.14 million as the Australian dollar strengthened against the US dollar, offsetting positive valuation gains in the underlying portfolio.
Despite the loss, the Fund declared and paid a distribution of 10 cents per unit, supported by the realisation of a portfolio company and effective cash rationalisation. The Fund’s net tangible assets per unit declined from $1.87 to $1.73 over the period, reflecting the combined impact of currency movements and fair value adjustments.
Portfolio Activity and Realisations
During the half-year, CD3 realised its investment in U.S. Urology Partners, a healthcare services provider that expanded significantly under the stewardship of NMS Fund III, LP. This exit generated US$1.78 million in cash flow to the limited partnership, underpinning the Fund’s distribution payments.
The Fund’s portfolio remains diversified across 67 companies, with 49 generating ongoing value, seven in active sale pipelines, and approximately 18 classified as mature or non-core. The Fund is in the early stages of its harvest phase, focusing on selective realisations and operational support to maximise value amid stabilising US private equity market conditions.
Capital Management and Outlook
CD3 closed the half-year with $16.73 million in cash, including $7.2 million earmarked for distributions. The Fund holds uncalled capital commitments of US$3.6 million, which management is actively exploring options to reduce. The responsible entity emphasises disciplined capital management and asset-by-asset execution rather than portfolio-level transactions, drawing on experience from earlier funds in the series.
Long-term performance metrics remain robust, with a post-tax annual return of 13.2% since inception and a total value to paid-in capital multiple of 2.42 times, underscoring the Fund’s ability to generate value over time despite short-term volatility.
Market Context and Risks
The US private equity market showed signs of recovery during the period, with stabilising interest rates and improved liquidity supporting larger, higher-quality deals and selective IPOs. However, valuation disparities persist across sectors and vintages, with technology and healthcare assets attracting strong demand while older or complex holdings may trade at discounts.
Investors should note the inherent valuation uncertainties due to the illiquid nature of private equity investments and the impact of foreign exchange fluctuations on reported results. The Fund’s valuation relies on unobservable inputs and periodic assessments by underlying managers, which can introduce volatility in reported net asset values.
Bottom Line?
As CD3 advances through its harvest phase, investors will watch closely how currency dynamics and selective realisations shape its path to sustained returns.
Questions in the middle?
- How will ongoing foreign exchange volatility impact CD3’s asset valuations and distributions?
- What is the timeline and likelihood for realising the seven portfolio companies currently in the sale pipeline?
- How might the Fund manage or reduce its uncalled capital commitments amid evolving market conditions?