NAC Investment Report NTA April 2021

Market Insight

The month of April saw the NAC Investment Portfolio increase by +4.55%, outperforming the benchmark S&P/ASX 300 Industrials Accumulation Index (XKIAI) which increased by +3.09%. This brings portfolio performance since inception to +16.26% p.a. outperforming the benchmark index which has returned +7.88% p.a. over the same period. The performance for the month was driven by a number of the core positions including Experience Co (ASX: EXP), Over The Wire (ASX: OTW) and Objective Corporation (ASX: OCL), and pleasingly there were no significant detractors to performance. From a news flow perspective the only notable update came from EXP, and we continued to add to two new investments in the portfolio, one of these being Urbanise.com Limited (ASX: UBN).

EXP completed two acquisitions of premium walking experiences which will form the third division of EXP, serving the premium adventure category. We estimate that these two acquisitions will initially be small from a contribution perspective with a combined EBITDA of <$1.25 million p.a., but from a strategy perspective these acquisitions are significant for a variety of reasons. Firstly, the premium adventure segment within Australia has been growing rapidly and looking to compete with the experiences provided in North America, and this trend has been further accelerated due to COVID-19. In such a high growth segment we believe that there are a number of private businesses (such as Australian Walking Tours) that provide unique experiences with high barriers to entry, which would be extremely complementary to the existing operations of EXP.

These recent acquisitions also bring with them a management team that will transition across to EXP and provide valuable experience in an industry that has ample organic growth opportunities. We believe that over the next 3-5 years EXP will mature into a leading provider of tourism experiences in Australia and New Zealand with diversified operations by experience and location, and the opportunity to maximise this position through capitalising on the knowledge and insights generated from their client base. As mentioned above, the NAC investment portfolio has been building on two new investments for some time with one of these (albeit still being relatively small) being Urbanise.com (ASX: UBN). Urbanise.com provides industry specific cloudbased SaaS platforms to strata & facilities managers. Without doubt UBN has had many a false start but we believe that the core remaining products which have had a significant amount of capital, time and investor feedback spent on them, are potentially at an inflection point. At the core of the investment thesis, from our perspective, are two key variables. The first of these is the strong demand within key target markets for a sophisticated cloud-based system with the capability to manage both high volume and complex data which can be scaled across numerous clients and geographies. Secondly, both the strata and facilities management markets themselves have significant scale with clients often managing thousands of assets that require continual management and associated record keeping. Finally, PICA Group, one of Australia’s largest property and strata managers invested a significant amount of capital a number of years ago and also entered into a 10-year agreement to roll out the Urbanise.com software across its network. Clearly this agreement has taken longer to implement than anticipated, but with over 200,000 lots managed by PICA it will provide UBN with significant credibility and a strong competitive advantage if its software can be rolled out through this network.

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