Blue Sky eyes retirement sector with $20 million-plus investment

Blue Sky Private Equity has invested more than $20 million for a minority stake in retirement-living company Oak Tree Group.

Oak Tree Group is a developer and operator of independent living retirement homes in regional areas. The BSPE investment will go towards the development and operation of 2000 units for retirees over the next five years, spread across six regional locations.

BSPE Sydney office managing director Andrew Champion told SmartCompany this morning that the decision to invest in Oak Tree Group reflected the future demand of the retirement-living sector, and it ticked “a few key thematics” attractive to BSPE.

“We have an ageing population and there is a real shortfall of supply in retirement products and services,” he says. “Oak Tree operate at the affordable end [of aged-living options] and in regional locations. We like that niche.”

Champion says it was BSPE’s first investment into the retirement sector and the $20 million-plus figure would stay within the Oak Tree Group.

“They have nine village projects underway. There are plans to develop three to five new villages in six regional hubs each year in perpetuity,” he says.

Oak Tree Group was founded in 2004 and currently operates six completed villages. It operates in areas including Cairns, Yeppoon, Capricorn Coast, Boronia Heights and Toowoomba. The nine projects in development include two village extensions and two village acquisitions and conversions.

Oak Tree Group managing director Mark Bindon said in a statement that the investment by BSPE would enable the business to expand.

“Blue Sky’s capital will allow Oak Tree to accelerate new developments to meet currently unmet demand in our targeted regions.”

Champion and BSPE managing director Tim Wilson will join the board of Oak Tree Group.

Champion says a key challenge ahead for Oak Tree will be to ensure the villages stay ahead of the curve in a growing market.

“You have to make sure you have the right product in the right market, it has to be affordable and attractive.”

BSPE is part of Blue Sky Alternative Investments Limited communities. BSPE focuses on investment in small- and medium-size enterprises in return for minority stakes.