Snowball opens up access to private equity, alternative funds

Snowball is expanding its offer to take in funds that specialise in private equity. Photo / Supplied

Online investment platform Snowball is expanding its offering to provide investors with exposure to managed funds that have previously not been widely accessible.

Snowball, which wants to become a one-stop platform for retail and wholesale investors, said it would provide access to asset classes such as private equity, private credit, “long-short funds”, and other alternative investment strategies.

“These asset classes play an important role in a well-constructed investment portfolio, providing the potential for enhanced returns, increased diversification, and combatting volatility that is inherent in the stock market,” the company, one of the first in New Zealand to specialise in crowdfunding, said.

Private market and alternative assets are set to grow at more than twice the rate of public assets, from US$13 trillion ($22 trillion) in 2023 to over US$60 trillion by 2032, Snowball said.

Co-founder and managing director of Snowball, Simeon Burnett, said these types of funds were an important and sometimes large part of an investor’s portfolio but were are often only available to institutional investors or high net worth investors with high minimum investment levels required.

“We have focused on a unique set of funds that not only provide investors with new types of exposure, but are also liquid, meaning that investors can build a position over time, or if needed sell down,” he said.

He said Snowball was eliminating the traditionally high barriers to entry and lowering the minimum investment levels required to invest in these important asset classes.

Snowball, which was founded in 2012, has so far raised $200 million from its 55,000-strong investor base.

The company is offering access to Federation Alternative Investments II (F2) from Federation Asset Management, a private equity firm.

This fund offers access to a diverse portfolio of Asia Pacific mid-market private companies, spanning different stages of maturity and industries.

It is also offering exposure to Salt Funds’ Long Short Fund, which specialises in actively seeking to maximise returns while managing the risks of the investment.

Snowball is also targeting a fund from Private Capital Group (PCG), which offers access to private credit markets and an opportunity to earn income from loans to private companies.

As an asset class, private credit encompasses all forms of non-bank lending, Snowball said.

“It has seen significant growth internationally post-GFC as banks continue to pull back from lending to small to medium-sized businesses due to tighter regulatory capital requirements,” it said.

Snowball was one of the first companies to acquire an equity crowdfunding licence from the Financial Marketing Authority (FMA), launching its first fund in 2014.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.