OBL inconsistent profits, page-28

Some general comments re OBL and the funds ...

- Payment waterfalls for funds 1,2&3 are similar and they're all "whole of fund" setups. Key difference is insurance for funds 2&3 (paid by fund, but protects OBL balance sheet) which is offset by OBL receiving 80% of the profits after capital/hurdle (vs 85% for Fund 1).
- Funds 4&5 are "deal by deal", pay OBL as an investor at the same rate as other investors up to hurdle (including catchup for any losses) ... then OBL gets a performance fee (20% up to IRR of 20% then 30% above the 20% IRR). These funds have less risk for OBL and less investment (20% vs 25% of capital) and therefore less upside (reverse of 1,2,3). They're also much bigger than funds 1,2&3 (combined funds 4/5 of US$1B vs ~US$300M for 1/2/3).
- Funds 6/7 are more complicated still ... but higher hurdle (10% vs 8% for 5/6) and much lower investment by OBL (only 5%) to achieve similar % performance fees are the main differences.

OBL's historical IRR is ~60% and all the other funds have had early success with even higher IRR's for completed investments. Fund 1 hasn't achieved good IRR for completions to date and OBL hasn't yet received any of their money back, but the fat lady is a long way off singing! With A$2.4B of EPV still to be completed (the bulk forecast for FY22) what's to come may (should?) dwarf what's been completed already with OBL getting it's capital, return, management fees and even some outperformance fees within FY22.

Re the funding models, the vast majority of investments are now under a model closer to stock pickers or property managers (but with more upside and no correlation with financial markets). As the balance sheet and funds 1-3 settlements roll-off and proceeds are reinvested in fund 4/5/6/7 type models, IMO, OBL's earnings will become far more consistent/predictable.

Cheers,