WAM Alternative Assets Posts 79.6% Profit Surge and Lifts Dividend to 6.0 Cents

Robust Profit Growth Reflects Portfolio Maturation

WAM Alternative Assets Limited (ASX:WMA) reported a striking 79.6% jump in net profit after tax to $11.19 million for the year ended 30 June 2026, nearly doubling its operating profit before tax to $16.6 million. This surge was underpinned by a 9.1% increase in its investment portfolio, which has grown at an annualised 8.9% since Wilson Asset Management took over as investment manager in October 2020.

The company’s diversified portfolio spans private equity, infrastructure, water, real estate, private debt, and agriculture strategies. Portfolio Manager Nick Kelly highlighted that strong revaluations in private equity investments contributed more than half of the annual performance, reflecting the portfolio’s progression beyond the typical J-curve phase where value is gradually realised.

Shareholders Endorse Continuation and Dividend Boost

In a significant milestone, over 97% of shareholders voted in favour of continuing the company’s strategy at the October 2025 meeting, removing years of uncertainty and solidifying the board’s mandate to build on the portfolio’s revitalisation. The board declared a final dividend of 3.0 cents per share, partially franked at 60%, bringing the full year dividend to 6.0 cents per share. This equates to a dividend yield of 6.3% and a grossed-up yield of 7.6% based on the 30 June 2026 share price of $0.96.

The company’s profits reserve stood at 13.6 cents per share before the final dividend payment, providing 2.3 years of dividend coverage. However, the ability to maintain fully franked dividends depends on the timing and quantum of realised profits and franking credits generated from investment exits and income from underlying assets.

Active Capital Deployment and Portfolio Diversification

WAM Alternative Assets continued to deploy capital actively in FY2026, committing $15 million to Allegro Fund V, extending its exposure to turnaround and special situations private equity in Australia. The company also invested $10 million in Fortitude Investment Partners’ first commingled fund, with an additional $5 million allocated for co-investments. Real estate co-investments were completed via Wentworth Capital, and private equity co-investments through Liverpool Partners.

Cash holdings were reduced from 20.3% to 2.4% of the portfolio, aided by a new treasury management solution investing surplus cash in investment-grade credit while maintaining liquidity for capital calls. This shift addresses prior periods where elevated cash detracted from performance.

Legacy Assets and Exit Environment Challenges

Legacy investments, once a significant part of the portfolio, now represent less than 15% of net assets and continue to be managed for orderly exit. The private equity exit environment remains challenging amid macroeconomic headwinds, geopolitical tensions, and a closed IPO window, delaying some realisations. Nonetheless, underlying managers remain active buyers, preferring to wait for better pricing before selling.

During the year, WAM Alternative Assets completed the exit of Birch and Waite, returning over four times the initial investment value. Capital returned from this and other exits is being recycled into new opportunities.

Risk Management and Governance

The company’s risk framework addresses financial, strategic, and operational risks, including investment strategy execution, economic fluctuations, liquidity management, and governance. The board comprises independent and non-independent directors, with robust processes to mitigate conflicts of interest. The company qualified as a base rate entity for tax purposes in FY2026, benefiting from a reduced 25% corporate tax rate.

Directors’ remuneration remained steady, with no significant changes in company affairs during the year. The company’s net asset value held steady at $227.2 million, with shares trading at an 18.6% discount to NTA.

Looking Ahead to FY2027

WAM Alternative Assets enters FY2027 with a more mature and diversified portfolio, poised to benefit from ongoing portfolio maturation and capital recycling. While macroeconomic uncertainties and private equity exit timing remain challenges, the company’s strengthened position and clear shareholder mandate provide a solid foundation for delivering long-term value. The board and management remain focused on disciplined capital allocation, liquidity management, and sustaining attractive dividends.