Booster Innovation Fund Reports NZD 24.68 Million Net Assets and $1.59 Million Profit

Profit Recovery Amid Early-Stage Investment Risks

Booster Innovation Fund (NZX:BIF) swung back to profitability in the 2026 financial year, posting a net profit after tax of NZD 1.593 million, a sharp turnaround from a loss of NZD 1.739 million the previous year. This recovery coincides with a 21% increase in net assets to NZD 24.68 million, reflecting ongoing capital inflows and positive fair value adjustments.

However, the Fund’s portfolio remains heavily weighted towards early-stage, unlisted companies valued using Level 3 fair value inputs. These valuations rely on management’s judgement, factoring in recent capital raises, business plan progress, and cash reserves, which introduces significant uncertainty and volatility to reported figures.

Portfolio Composition and Valuation Challenges

The Fund’s investments, valued at NZD 24.47 million, are predominantly held through direct equity and a 62% stake in the NZ Innovation Booster Limited Partnership (NZIB). The portfolio spans sectors such as life sciences and medical technologies (35%), energy and clean technologies (23%), materials and technologies (29%), and information technology services (11%).

During the year, the Fund acquired NZIB units and made additional investments in portfolio companies, with acquisitions totaling NZD 2.585 million. Fair value gains of NZD 1.756 million were recognised, but these gains mask underlying valuation pressures. Notably, post-balance date adjustments included a NZD 719,000 write-down following a capital raise at a lower price than the carrying value, illustrating the ongoing valuation risk inherent in early-stage investing.

Governance and Regulatory Developments

Booster Investment Management Limited (BIML), the Fund’s Manager, is currently defending civil proceedings filed by the Financial Markets Authority (FMA) regarding historical investments in the Booster Wine Group. While any legal costs or penalties will not impact the Fund directly, the proceedings add a layer of regulatory uncertainty to the Manager’s operations.

Governance changes over the year included board appointments and key personnel shifts at the Manager, such as the appointment of Diana Papadopoulos as a director and Simon O’Grady as Chief Investment Officer. The Fund’s Investment Committee was restructured to operate independently, with new advisors joining the team.

Capital and Unit Holder Dynamics

The number of units on issue rose from 14.4 million to 16.3 million, supported by proceeds of NZD 3.074 million from unit issuances, partly offset by withdrawals of NZD 347,000. Substantial product holders include the Booster KiwiSaver Scheme (56%) and Asset Custodian Nominees Limited (28%), with the latter holding units on behalf of key stakeholders including the Manager’s ultimate parent company.

Despite the Fund’s units being listed on the NZX Main Board, liquidity remains limited due to the nature of the underlying investments, which are not readily redeemable. The Fund aims to maintain a limited cash buffer to meet withdrawal requests, but realisation of assets could take over six months.

Fees and Reporting Adjustments

The Fund did not pay any performance-based management fees during the year, reflecting the hurdle rate and high water mark conditions. Administration expenses remained steady at approximately NZD 35,000. Regulatory changes led to the Fund’s removal from mandatory climate reporting, and the Responsible Investment Policy was updated to clarify ESG considerations, particularly noting that ESG integration is not applied to unlisted investments.

Valuation methodologies were refined, including aligning the approval process for NZIB-held interests with directly held investments, ensuring consistent and robust valuation oversight.

Valuation Sensitivities and Market Risks

The Fund’s exposure to market price risk is significant given the unlisted nature of its investments. A hypothetical 30% market price movement could swing net asset value by approximately NZD 7.3 million, underscoring the volatility investors face. Credit and interest rate risks are minimal due to the Fund’s investment profile and cash holdings.

Recent valuation adjustments, including a notable write-down following a capital raise at a discount, highlight the ongoing challenge of accurately pricing early-stage ventures with limited market comparables.

Looking ahead, the Fund’s ability to generate returns will depend on the commercialisation progress of its portfolio companies, successful capital raising at favourable terms, and the Manager’s navigation of regulatory scrutiny.

Given the Fund’s concentrated exposure to early-stage innovation companies and the reliance on subjective valuation inputs, investors should remain alert to potential valuation volatility and liquidity constraints.

In light of the Fund’s recent valuation adjustment and ongoing FMA proceedings against the Manager, the unfolding legal and market developments will be critical to monitor.