australian private equity & venture capital journal // october 2014

OCTOBER 2014 · Year 23 No 246

Private equity in divestment discussions with listed company

Superannuation debate ‘should be refocused on returns’

Listed retailer exited at close to five times investment

Image: Government data storage is the focus

of a new investment.Story page 4

Australian Private Equity & Venture Capital Journal OCTOBER 2014 · Year 23 No 246 | 2

CONTENTS

EDITOR’S LETTER

AVCAL’s new style of advocacy 3

INVESTMENT ACTIVITY

Private equity in divestment

discussions with listed company 4

Data centres business attracts

$100m plus investment 4

Listed company close to decision on

divestment bids 4

Discussion ends on $3.4bn public to

private bids 6

Private equity takes stake alongside

institutional investor 6

Listed company ends discussions

with private equity 7

US venture firms invest $US35m in

invoicing software 8

Melbourne firm invests in satellite

communications services 9

Venture firms invest $3.2m in skin

anti-aging device 9

Private equity firm close to

completing first deal 11

Asian affirm re-invests in Perth-based

cafés operator 16

Mezzanine capital provided to niche

finance business 17

INFORMAL VENTuRE CApITAL

$9.1m fundraising includes

crowdsourced $1.2m 9

Finnacial services accelerator closes

second intake 19

NEWS

Superannuation debate ‘should be

refocused on returns’ 7

Fees do matter, ASIC commissioner

tells funds managers 8

Super fund invests in US micro

cap equities 13

Float exits dominate 2014 AVCAL

Awards 13

Asian venture capital investment

accelerating 14

New advisory and investment

business 16

In memoriam: Dr David Evans 17

Accelerator partners with NRMA 18

NSW ICT Entrepreneur of the year

nominations 18

Growth Company of the Year finalists 19

pERFORMANCE

Listed retailer exited at close to five

times investment 5

Start-up accelerator returns almost

seven times investment 16

Private equity boosts profit for

managed investment company 20

INVESTEE NEWS

Water filtration technology licensed

to international company 12

Venture backed software firm on

acquisition trail 13

Drug developer on track for US

application 18

pEOpLE MOVES

Sydney firm appoints investor

relations manager 18

Ben-Meir now director of

Entrepreneurs Infrastructure Program 19

Founder of infrastructure fund

manager retires 19

Sovereign wealth fund appoints

new chief investment officer 20

NEW FuNDS & FuNDRAISING

Energy investor closes $US3.4bn fund 12

$US3.9bn final close for Asian

regional fund 12

CONFERENCES & ROuNDTABLES

Cloud applications to be a theme of

tech presentations 20

COMING EVENTS

Coming Events 28

ShARES ChART

Shares Chart 29

FEATuRES

SECONDARY MARKET SALES DYNAMICS 21

SIMPLE RULE CHANGES COULD ACCESS FOREIGN CAPITAL 23

REARVIEW MIRROR 26


AUSTRALIAN PRIVATE EQUITY & VENTURE CAPITAL JOURNAL

Owned and Published by

PRIVATE EQUITY MEDIA

PO BOX 510, Five Dock,

NSW 2040

P: 02 9712 1350

www.privateequitymedia.com.au

MANAGING EDITOR

Adrian Herbert

P: 02 9712 1350

M: 0407 226 142

E: adrian.herbert@

privateequitymedia.com.au

NATIONAL ADVERTISING

MANAGER

Philip Thomson

P: 02 9489 0033

M: 0419 757 211

E: pthomson@

marketingforesight.com.au

DESIGNER

Odette Boulton

Australian Private Equity &

Venture Capital Journal is an

Independent publication. The

Journal welcomes editorial

contributions. All opinions are

those of the authors. All material

copyright Australian Private

Equity & Venture Capital Journal

and individual authors.

ISSN number: 1038–4324

EDITOR’S LETTER

When Yasser El-Ansary welcomed

delegates to AVCAL alpha last

month, he quickly turned to

outlining the industry association’s revamped

advocacy role.

In his ten months as chief executive

members had made it clear they wanted

AVCAL to be more proactive, he said.

Specifically, they wanted more engagement

in the public policy debate about how to

build a stronger Australian economy and

more engagement with government and the

media.

There are, of course, risks as well as

opportunities in these changes.

Regarding government, the main risk is that

of denying politicians opportunities to claim

good ideas as their own. This is a well honed

tool of lobbyists. Politicians naturally want to

be seen as thought leaders not followers. If

they adopt policies only in the wake of public

campaigns they risk being seen as followers

or, even worse, yielding to pressure from

special interest groups.

When it was formed in 1992 AVCAL was

certainly a special interest group and quickly

became sensitive to scrutiny by the media.

Indeed, the steering committee that formed

the association specifically excluded this

publication from sitting in on its first meeting.

The association adopted a more public

interest stance after Katherine Woodthorpe

was appointed chief executive in 2006.

This included an advocacy role in Canberra

lobbying public servants and MPs, both in

government and opposition, on the benefits

that venture capital and private equity

could provide to the community. This was

a hard sell at times, particularly to an ALP

government, but progress was made.

Successes included private equity funds

being included in the managed investments

trusts regime and some fine tuning of the

VCLP legislation. AVCAL also, arguably,

persuaded the former ALP government to

continue modest funding of the venture

capital sector over a crucial period in the

wake of the global crisis.

But AVCAL did not persuade the former

government to recognise the key role venture

capital and private equity could play in

transforming the Australian economy from

a resources to a technology base and to

date has been similarly unsuccessful with

the current government. A shift to a more

public stance is therefore understandable and

probably desirable.

AVCAL has, continued its lobbying role

including submissions to the Senate Inquiry

on Australia’s Innovation System and to the

Financial Systems Inquiry. More resources

are, however, now being directed toward

the development of the association’s public

profile with the introduction of a marketing

and communications theme: “Building Better

Businesses”.

The simplicity of this theme should help

ensure that everyone in the industry can sing

from the same song sheet.

The singing started at AVCAL alpha with

the focus of the event shifted from investing

and funds management towards operational

management of investee companies. This

provided a platform for chief executives

to outline how they were building better

businesses and how private equity was

contributing.

It is not going to be easy, but the focus on

Building Better Businesses could perhaps

persuade the community that venture capital

and private equity can play a key role in

building a stronger economy.

AVCAL just needs to ensure it still gives

government the opportunity take the lead in

making that happen.

ADRIAN HERBERTManaging Editor, Australian Private Equity & Venture Capital Journal

AVCAL’S NEW STYLE OF ADVOCACY


INVESTMENT ACTIVITYPRIVATE EqUITY IN DIVESTMENT DISCUSSIONS WITH LISTED COMPANY

Affinity Equity Partners is to acquire a

35 per cent stake in Virgin Australia’s

frequent flyer programme for $336 million.

CHAMP Private Equity is in discussions

to buy two Australia and New Zealand-

based businesses from Nuplex Industries

(ASX: NPX).

The multi-national synthetic resins

manufacturer has confirmed the

discussions concern agency and

distribution business Nuplex Specialties

and plastic additives business, Nuplex

Masterbatch.

In a 24 September announcement,

Nuplex said discussions were continuing

but no binding arrangements had been

entered into and it would only proceed

if it considered that a transaction would

maximise value for Nuplex shareholders.

Nuplex makes synthetic resins used in

the production of paints and protective

coatings as well as resin based flooring

materials. The company also distributes

specialty chemicals.

In its 2014 annual report, Nuplex

said that in the latest financial year its

specialties division (Nuplex Specialties

and Nuplex Masterbatch) had achieved

earnings before interest, tax, depreciation

and amortisation (EBITDA) of $14.2 million

in Australia and New Zealand, down 44.3

per cent from the prior year.

The report said: “In Nuplex Specialties,

sales were weighed on by the loss of two

important principals we represented in ANZ,

due to a change in their parent company

ownership. In Australia, sales related to

manufacturing were also subdued.

“Margins were compressed due to the

challenge of recovering the impact of the

strengthening US dollar on the cost of the

imported products we on-sell. In addition,

increased competition, particularly in the

food and nutrition and personal healthcare

segments had a negative impact on margins.

“Masterbatch, experienced lower

volumes due to market declines and a loss

of market share. However, in the second

half of the year, the new management

team has been successful in stabilising and

refocusing the business.”

INVESTMENT ACTIVITYDATA CENTRES bUSINESS ATTRACTS $100M PLUS INVESTMENT

Quadrant Private Equity has made a $100

million plus expansion capital investment

in data centres company CDC. The

investment, for a 45 per cent stake, values

the business at $250 million to $300 million.

ACT-based CDC (Canberra Data

Centres) is a major supplier of data storage

services to the federal government.

CDC chairman Kenneth Lowe has sold

down his 60 per cent stake in the business

along with general manager Craig Sebbens

who held 26 per cent. Chief executive Greg

Boorer, who has retained his stake, was the

only other shareholder.

The management team have committed

to remain with the business for at least five

years.

CDC, which was founded in 2007, is

the largest provider of outsourced data

centre co-location services to the federal

government. The company has two centres

at Hume, ACT, and is to open a third centre

in Fyshwick, ACT, in January.

Earlier this year, CDC was named on the

Data Centre Supplies Panel (Panel 2) by

the federal Department of Finance which

qualifies data centre providers to accept

work from federal and state government

agencies. Last month (September),

CDC was named as a contractor to the

Department of Defence under an $800

million centralised processing master

contract between the department and

global security and aerospace company

Lockheed Martin.

CDC says its data storage centres are set

up to a unique standardised design which

provides technically superior services at

lower total costs. A feature of the services

is the to automatically ramp capacity up

and down depending on client workloads.

Set-ups can also be customised for client

requirements.

Sydney-based Quadrant is to appoint

three directors to CDC’s board: managing

director Chris Hadley, partner Justin Ryan

and investment director Alex Eady. Lowe,

Sebbens and Boorer will complete the board.

Boorer said: “Over the last seven years,

CDC has grown to become the leader in

the provision of highly secure, flexible,

next generation data centre services to

government. Our partnership with Quadrant

will result in a stronger CDC that has access

to the required capital to further improve

our capacity and capability to be better

placed than ever to deliver in our role as a

key strategic partner for government.”

Justin Ryan said: “We have been

impressed with Greg and his management

team and are excited about working with

them to accelerate the next phase of

growth for the CDC business.

“With continued outsourced data

centre adoption and the rapid growth

of data, CDC’s customised secure

modular design positions it extremely

well to accommodate the evolving ICT

needs of its customers and provide

additional capacity as its customers’ ICT

requirements grow over time.”

Hadley added: “CDC has established a

strong position in the Canberra market

servicing the federal government’s

data centre requirements. We believe

there is an opportunity to leverage this

proven design methodology in other key

markets, servicing both state and federal

government data centre requirements.

“Quadrant has significant funds available for

further investment and CDC is a great example

of Quadrant partnering with Australian

entrepreneurs to provide capital and strategic

expertise to execute on growth.”

Quadrant was advised on the

transaction by KPMG and Gilbert + Tobin.

CDC was advised by CBA Corporate

Capital Markets & Advisory and Johnson

Winter & Slattery.

The CDC investment is the second from

the $850 million Quadrant Private Equity

No 4 fund (QPE4) closed early this year

(APE&VCJ, Mar 14).

The first investment was a majority stake

in ICON Cancer Care in May. Quadrant

invested $40 million in the hospitals

business. (APE&VCJ, Jun 14).

INVESTMENT ACTIVTYLISTED COMPANY CLOSE TO DECISION ON DIVESTMENT bIDS

Orica (ASX: ORI) is believed to be close

to a decision on whether to accept

a private equity or trade offer for its

chemicals business or whether to demerge

the business.


Orica announced in August that it

intended to divest the business either by

demerger or sale.

The company said then that it had

received a number of unsolicited

enquiries about acquiring the chemicals

business and would consider these but

demerger was “currently the preferred

approach”.

The recent ASX sell-off may, however,

have made a sale more likely.

Orica Chemicals is a leading supplier

of chemical products to mining, water

treatment, other industrial, food and

cosmetics markets in Australia and New

Zealand. The business also has a growing

presence in Asia and Latin America.

With annual revenue of about

$1.2 billion, Orica Chemicals appears too

large for a solo bid from an Australian

private equity firm except Pacific Equity

Partners (PEP). PEP and a number of

global buyout firms are believed to have

expressed interest.

Orica is to give a further update on

the proposed divestment in its full year

results announcement on 19 November.

PERFORMANCELISTED RETAILER ExITED AT CLOSE TO FIVE TIMES INVESTMENT

Turnaround private equity firm Anchorage

Capital Partners has disposed of its

remaining stake in electronics retailer Dick

Smith Holdings (ASX: DSH) for more than

$100 million.

The post-escrow share sale locked in a

gross return on investment of close to five

times over about 21 months.

The 47.3 million shares were sold in a

block trade on 15 September. This was

less than a month after Anchorage had

written to Dick Smith stating that it had no

intention of selling once the escrow period

for its holding ended with the release of

the company’s 2014 financial year results

on August 19.

Anchorage founder and managing

director Philip Cave reaffirmed that view

at the AVCAL alpha event last month

(September) during which he and Dick

Smith managing director Nick Abboud

spoke about the successful turnaround

of the business which was floated in

December 2013.


The precise wording of Anchorage’s

letter, however, had made it clear that the

private equity firm would be prepared to

sell at any time depending on the state of

the stock market.

Anchorage managing director Daniel

Wong wrote to Abboud on 18 August: “We

are writing to inform you that in light of

the recent trading results and our positive

view of the company’s future prospects,

we currently have no intention of selling at

the prevailing market price.

“We have appointed Macquarie Capital

as our financial adviser and broker in

relation to our stake. Should Anchorage

decide to divest of some or all of our stake,

Anchorage intends to instruct Macquarie

Capital to sell its shares having regard to

recent trading activity and the prevailing

share register at that time ...”

Monday 15 September was a day

when the ASX took a substantial tumble

although Dick Smith shares rose slightly.

Macquarie sold 47.3 million Dick Smith

shares at $2.22 a share.

The shares were issued in the IPO at $2.20.

Philip Cave retained a personal stake in

Dick Smith following the sale by Anchorage.

INVESTMENT ACTIVITYDISCUSSION ENDS ON $3.4bN PUbLIC TO PRIVATE bIDS

Treasury Wine Estates (ASX: TWE) has

ceased acquisition discussions with

Kohlberg Kravis Roberts (KKR) and Rhône

Capital and separately with another

unnamed global private equity investor

believed to be TPG Capital.

KKR and Rhône Capital made an

indicative $5.20 per share bid in July

(APE&VCJ, Aug 14) valuing the company

at $3.4 billion. The second private equity

investor later matched that bid.

Treasury announced on 29 September

that discussions with both parties had

ceased as it was apparent that the bidders

were “not able to support a transaction on

terms and at a price acceptable to

the board”.

Treasury’s board and management had

held discussions with institutions holding

in aggregate about 50 per cent of the

company’s shares, the announcement said.

This had resulted in “clear feedback from

almost every one of these shareholders

indicating they believed a price of $5.20 per

share undervalued the company”.

The announcement said: “This view is

driven by the value that major shareholders,

the board and management believe will be

delivered over time through the company’s

strategic plans to:

“Increase and accelerate consumer

marketing investment in the company’s

brands:

“Change Penfolds release dates;

“Deliver the significant overhead cost

reduction program;

“Deliver supply chain savings and

efficiencies through a separate focus on the

commercial portfolio versus the luxury and

masstige (downward extension of prestige)

portfolio in Australia; and

“Build improved momentum in the top

line through stronger consumer, retailer

and distributor relationships, enhanced

marketing programs and a greater focus on

the company’s priority brands.”

Treasury said it had given both bidders

opportunity to conduct non-exclusive due

diligence.

“Throughout the due diligence process

the private equity bidders indicated

support for management’s strategic plans

and road map. They also did not identify

any major concerns with the business,” the

announcement noted.

Treasury chairman Paul Rayner said:

“Following the receipt of the initial,

indicative proposals from the two parties,

we believed it was in shareholders’ best

interests to grant those parties the

opportunity to conduct non-exclusive due

diligence. That process has now concluded

and the board is confident in the strategic

plans to grow the company and is looking

forward to working with management to

deliver value to its shareholders.”

The company said its year to date

performance was tracking ahead of

plan and it would provide an update on

performance and the strategic roadmap at

its annual general meeting.

INVESTMENT ACTIVITYPRIVATE EqUITY TAKES STAKE ALONGSIDE INSTITUTIONAL INVESTOR

A consortium led by OpTrust Private

Markets Group and Catalyst Direct Capital

Management is to acquire a majority

stake in the parent company operating

Melbourne’s SkyBus business.

The value of the transaction has not been

disclosed but it is believed to be in excess

of $50 million.

A new entity, majority owned by OpTrust

PMG will own the SkyBus business. A

new private equity vehicle, Catalyst Direct

Capital Management, will also own a stake.

Current SkyBus managing director Simon

Cowen will retain a significant stake as

well as retaining a board seat as a non-

executive director.

SkyBus operates the express bus route

between Melbourne Airport and the

Melbourne CBD under a concession granted

by Public Transport Victoria. The service

terminates at Southern Cross station from

where SkyBus provides free shuttle-bus

services to inner city locations to drop off

and pick up passengers. The express bus

provides services departing at least every 10

minutes, 24 hours a day, 365 days a year.

According to SkyBus, more than 10

per cent of passengers who travel from

Melbourne Airport to the city and vice versa

use its services.

SkyBus also provides transport services

to corporate clients including the airport.

OpTrust PMG managing director Stan

Kolenc said the acquiring consortium saw

significant growth opportunities for SkyBus

and the board and management planned to

work closely with Public Transport Victoria

and other stakeholders to expand services

as Melbourne Airport’s passenger numbers

continued to increase.

Catalyst Direct managing director

Trent Peterson said the investors had a

clear vision for the growth of the SkyBus

business starting with expanding its share

of passengers travelling to and from

Melbourne Airport.

Catalyst Direct is a new private equity

vehicle which was spun out of Sydney-based

mid-market firm Catalyst Investment

Managers earlier this year. Peterson is also

a current managing director of Catalyst

Investment Managers. The SkyBus transaction

is Catalyst Direct’s first investment.

Catalyst Direct has been established to

partner with institutional investors seeking

to make direct private equity investments

in Australia. The new vehicle will help

identify suitable investments for these

investors, assist in executing transactions

and then manage and eventually realise


the investments. The business model

also involves investing a minority stake

alongside institutional partners as in the

SkyBus investment.

Ontario Public Services Employees

Pension Trust (OPTrust) invests and

manages one of Canada’s largest public

pension plans serving over 84,000

members and pensioners; it has about $C16

billion in funds under management.

OPTrust’s Investment Division launched

its Private Markets Group in 2006 to invest

in private equity and infrastructure. OPTrust

has long term plans to allocate 15 per cent

of its funds under management to each of

these asset classes.

OPTrust PMG has been investing in

Australia since 2010 and opened a Sydney

office in 2013 relocating Kolenc and

portfolio manager Morgan McCormick from

OPTrust’s London office.

The Sydney office is responsible for Asian

region investing which OPTrust expects to

eventually account for about 20 per cent of

its portfolio.

INVESTMENT ACTIVITYLISTED COMPANY ENDS DISCUSSIONS WITH PRIVATE EqUITY

Despite extensive due diligence, Pacific

Equity Partners (PEP) and Kohlberg

Kravis Roberts (KKR) had not submitted

a final offer for SAI Global (ASX: SAI), the

compliance services company announced

on 17 September.

SAI Global said PEP had claimed

uncertainty in relation to the value of

one part of the business, the Australian

Standards publishing licence agreement

which expires in 2018. (Australian

Standards is expected to seek substantially

higher returns from a renegotiated

contract).

The company said it had asked the

private equity firms for an indication of

their valuation of the remaining operations

which it said comprised most of the value

of the business. They had declined to

do so and the board had determined it

was not in shareholders’ interests to

continue discussions.

SAI said it had, however, received

proposals from a number of parties to

acquire one or more of its underlying

businesses and planned to continue

discussions on these.

In its 2014 annual report, released in

August, SAI said it had turned around

performance to achieve a net profit after

tax of $35 million after recording a loss

of $43 million the previous year. Earnings

before interest, tax, depreciation and

amortisation (EBITDA) had, however,

reduced from $100.6 million in 2013 to

$93.3 million.

NEWSSUPERANNUATION DEbATE ‘SHOULD bE REFOCUSED ON RETURNS’

AVCAL has called for the focus of

debate on superannuation to be shifted

Intelligence on companies, deals and multiples for private equity professionals

• Detailedfinancialsformillionsofprivateandpubliccompaniesworldwide

• Themostcomprehensivedealdatabase

• Originaldocumentsandfilings

• Dealsourcedocuments

• Unrivalledcorporatestructuresandownershipdata

• Tradingmultiplesforlistedcompanies

• Stockdata,earningsestimatesanddetailedforecasts

• Reliabletransactionmultiples-preandpostdeal

• Privateequityintelligenceandportfoliosearching

• BespokecomparabletemplatesusingourExcelAdd-In

• Integralanalysistoolsincludingvolumeandvaluetables

bvdinfo.com

[email protected]

0292233088

Comprehensive M&A deals and rumours

Company information around the globe


from fees to overall performance and

net returns.

The call is included in the industry

association’s second round submission to

the Financial System Inquiry.

“The interim report from the inquiry

(APE&VCJ, Aug 14) directed much of its

attention to fee competition within the

superannuation industry but what was

missing was a comprehensive analysis

of how the policy and regulatory system

could change to shift more of the focus

towards enhanced competition on net

returns to fund members,” said AVCAL

chief executive Yasser El-Ansary.

“Australia is perhaps the only developed

market in the world that is still trapped in

this policy and regulatory debate about

fees and costs – other economies are

focussed on net returns.

“In the end, superannuation has to

be about ensuring that the retirement

incomes of Australians are optimised,

which is necessary in order to reduce the

dependency of retirees on the age pension.

And, while keeping superannuation

fees down is important, research has

consistently shown that an optimal

diversified portfolio is framed around

striking the right balance between a variety

of asset classes – some of which might be

low-fee, and others that offer high above-

normal returns such as private equity and

venture capital,” El-Ansary continued.

AVCAL noted in its submission that

Australian private equity has outperformed

the S&P/ASX 300 Index by 185 basis points

per annum over the fifteen years to the

end of 2013 on a net-of-fees basis.

In addition, private equity and venture

capital funds – while constituting “active

management” in the sense that they aim to

outperform passively managed funds – do

not buy and sell investments on a high-

frequency basis. They employ “buy and

grow” strategies which typically involve

an average holding period of five years

per investment. This can be contrasted

with the 77 per cent of ASX investors who

churn their shares within five years or less

and the 17 per cent who churn their shares

within a year or less (ASX 2012 Share

Ownership Study).

AVCAL analysis shows that the

amount of capital invested by Australian

superannuation funds into the domestic

private equity and venture capital industry

is relatively small, around 1 per cent of the

current superannuation savings pool of $1.8

trillion. In other markets, such as the US, the

average allocation is close to 10 per cent.

“Allocating more investment into private

equity and venture capital is a vitally

important ingredient in helping to drive

improvements in Australia’s economic

productivity as well as enhancing our

innovation potential which go hand in hand

with one another,” El Ansary said.

He said the Financial System Inquiry

interim report had confirmed that

Australian businesses needed better access

to venture capital and private equity as a

source of growth funding.

“Australia is transitioning from its

reliance on the resources and commodities

sectors and into new high growth industry

sectors where we can effectively compete

in the globalised marketplace. But to

achieve that we have to make a series

of recommendations which improve the

capacity of the financial system to back

new investment into Australian businesses,”

he added.

AVCAL’s submission also calls for the

introduction of a new national innovation

system which is focussed on removing

barriers to the growth of the Australian

venture capital industry. In addition, it

calls for a number of tax reforms to be

considered as part of the Government’s Tax

White Paper, to help improve the capacity

of private equity and venture capital to

invest in Australian businesses.

AVCAL plans to continue to participate

in the inquiry’s consultation process.

INVESTMENT ACTIVITYUS VENTURE FIRMS INVEST $US35M IN INVOICING SOFTWARE

US venture capital firms Accel Partners

and Ribbit Capital have committed

$US35 million in first round funding to

Sydney-based invoicing software business

Invoice2go.

In 2002, freelance software developer

Chris Rode realised the only invoicing

programs available were included in full

function accounting systems. He realised

many small business owners would prefer a

simple stand alone program and coded the

first version of Invoice2go as he travelled

home from work.

In 2009, the software went mobile with

its launch on the iPhone App Store. The

app enabled tradespeople and mobile

services providers to invoice on the go.

Since then the software has since been

adopted around the world and is claimed

to be the leader in its space with about

120,000 users.

In conjunction with the new investment,

Invoice2go has opened a new office

in Palo Alto California and appointed

Accel chief executive in residence Greg

Waldorf as its chief executive. Chris Rode

continues to lead product development

from Sydney.

NEWSFEES DO MATTER, ASIC COMMISSIONER TELLS FUNDS MANAGERS

Melbourne venture firm Square Peg Capital

has led a $US6 million Series A capital

round for Israeli online technology business

Feedvisor.

ASIC commissioner Greg Tanzer told the

AVCAL alpha conference that the regulator

and the managed investments industry

shared the goal of ensuring that investors

had trust in the financial system.

He said this was behind ASIC’s push for

see-through portfolio holdings reporting by

superannuation funds.

He noted that fund managers had

expressed concerns that reporting

and valuing of underlying investments

could reveal commercial in confidence

information and was sympathetic to

these concerns. However, he doubted

suggestions that such concerns could

have the result of funds managers being

discouraged from accepting investment

from superannuation funds. Many other

countries already had similar requirements,

he said.

However, he said ASIC understood that

valuing private equity and venture capital

investments could be problematic and that

the expenses of compliance could in some

cases outweigh the benefits. These points

would be considered in the government’s

final framing of rules.

He said no materiality threshold had

been set at which investments should be

reported but non-material investments

would not have to be disclosed.


Tanzer said ASIC did not favour setting

a materiality level as “that’s where people

hide all the bad stuff”. He said ASIC

would work cooperatively with funds

managers to phase in the new rules now

starting from 1 July 2015 (after being

delayed from 1 July this year). He strongly

recommended that managers self-reported

any possible breaches.

Answering questions, Tanzer said

ASIC was in favour of reducing

regulatory burdens in cross-border funds

management arrangements and was

working to help establish the proposed

Asian Funds Management Passport with

Korea, New Zealand, the Philippines,

Singapore and Thailand by 2016.

Asked why there was such a strong

focus on revealing management fees in

proposed new superannuation reporting

rules, Tanzer said he did not accept the

concept that net-of-costs-and-fees returns

were the only figures that mattered.

The level of fees did impact on final

returns, he said.

He said fees disclosure was patchy in

some cases and was sometimes lost in

costs especially where investment returns

flowed through a chain of entities.

Note: More reports from AVCAL alpha

will be included in November APE&VCJ.

INVESTMENT ACTIVITYMELbOURNE FIRM INVESTS IN SATELLITE COMMUNICATIONS SERVICES

Lazard Australia Private Equity has taken

a majority stake in Melbourne-based

telecommunications installation and

maintenance company Skybridge Australia.

Financial details of the transaction have

not been disclosed.

Skybridge founder Glen Makin is to

retain a minority stake.

Makin founded Skybridge in 1999

recognising that the developing satellite

broadcast industry was poorly serviced

especially in remote and regional areas.

The business has also extended its services

in other areas such as installation of solar

panels. Today Skybridge business has more

than 1300 field engineers.

Skybridge has provided services for

Optus, Foxtel, Woolworths, IBM, NAB,

3M and other companies that require

consistent communication services right

across Australia. The company also holds

government contracts and is the exclusive

provider of VSAT installation services for

NBN Co.

Head of private equity at Melbourne-

based Lazard Australia, Gareth Young,

said: “Skybridge delivers an intelligent and

efficient service to its clients which makes

it a good investment proposition. We look

forward to building upon the company’s

leading technology platform and service

offerings into broader markets across the

country and, in the longer term, into other

countries.”

Skybridge chief executive Michael

Abela said the company was excited to

have attracted a capital partner that was

experienced in assisting and underpinning

growth.

“We believe this will accelerate us

towards our vision of being the leading

field installation and maintenance group in

Australia,” he added.

INFORMAL VENTURE CAPITAL$9.1M FUNDRAISING INCLUDES CROWDSOURCED $1.2M

UBS and Canaccord Genuity have led a

$9.1 million pre-IPO fundraising round for

taxi-booking app and mobile payment

technology company ingogo.

The funding has been provided by a mix

of local and Hong Kong investors and is said

to value the three-year-old business at $45

million although the proportion of equity

issued in the round has not been revealed.

A total of $1.2 million of that funding was

raised from less than 50 people in the first

deal for crowdsourced equity platform

VentureCrowd. ( APE&VCJ, Feb 14).

Chief executive and founder of Sydney-

based ingogo Hamish Petrie said the

new funding will be used to expand the

company’s services from Sydney and

Melbourne to other cities and to further

develop the technology ahead of an IPO

targeted for next year.

Prior to setting up ingogo in 2011, Petrie

founded and built up Moshtix which he

sold to News Limited in 2007. Ingogo

began as a taxi booking and in-app

payments model, of which there are a

number in Australia as well as globally,

but by last year had evolved to become a

mobile payments business suitable for a

wide range of businesses.

Ingogo has, however, gained a significant

slice of the Australian taxi booking and

payments market and expects to process

payments in excess of $150 million over the

next 12 months.

VentureCrowd enables individual

sophisticated investors to invest up to

$2,500 in a company. The bona fides of

companies which seek to register and of

investors are checked by early stage venture

capital firm Artesian Venture Partners which

set up the platform.

Artesian chief operating officer Tim

Heasley said: “Historically, individual

investors have only received access to

these types of deals by being on a favourite

clients list with investment banks, and

investing amounts of $250,000 and above.

VentureCrowd provided exclusive access for

smaller investment amounts in this deal to

our sophisticated investors.

“The response was amazing, with

applications significantly oversubscribed,

demonstrating that VentureCrowd is a

robust, viable, investment platform for

start-ups and investors.”

One of the individual sophisticated

investors who invested in ingogo through

VentureCrowd was Jonathan Herrman,

chairman of Shoeboxed Australia and

co-founder of Sydney start-up work space

business StartNest.

Herrman said: “It was great to be able to

get access to this deal. It was the first time

that I’ve been able to get access to a pre-

IPO opportunity of the quality of ingogo.”

Sophisticated investors interested in

gaining access other Australian start-

up businesses can register on the

VentureCrowd website.

Investments via VentureCrowd can be as

little as $1,000, while there is no maximum,

however, it is recommended on the site

that investors should build a diversified

portfolio over time.

For more information visit:

www.venturecrowd.com.au

INVESTMENT ACTIVITYVENTURE FIRMS INVEST $3.2M IN SKIN ANTI-AGING DEVICE

Blue Sky Alternative Investments’ (ASX:

BLA) venture capital division and Sydney


AUSTRALIAN PRIVATEEQUITY HANDBOOK

THE fIRST PROfESSIONAL PRAcTISE gUIDE SPEcIfIcALLY fOR THE AUSTRALIAN PRIVATE EQUITY INDUSTRY IS NOw AVAILABLE DIREcTLY fROm PRIVATE EQUITY mEDIA.

Order Australian Private Equity Handbook by Nick Humphrey (CCH Australia Limited RRP $95.00 inc. GST) now.

Simply visit: www.privateequitymedia.com.au and click on “Subscribe” in the green toolbar to buy online. Australian Private Equity & Venture Capital Journal subscribers qualify for a special discount price of $85.00 inc. GST.

We will mail your hard copy book as soon as your payment is processed.

Australian Private Equity Handbook is a plain English guide to professional private equity practise in Australia covering major aspects of deal making and the establishment of a private equity fund.

ORDER YOUR PROfESSIONAL PRAcTISE gUIDE

venture capital firm M.H. Carnegie & Co.

have jointly invested $3.2 million in an

Australian-founded company which is

commercialising a skin anti-aging device

which has already been approved for use

in the US.

Serene Medical Inc is seeking to capture

a share of the market currently dominated

by botox neurotoxin injections. The

company’s NeuBelle device has been

approved by the US Food and Drug

Administration (FDA).

NeuBelle can be used to precisely locate

a motor nerve and, using radio signals,

interrupt the signal pathway of the nerve

to the muscles it controls. This is very

similar to the cosmetic effects achieved

by injections of neurotoxins such as

botox. The results last for up to 12 months

compared with up to three months for

botox injections.

Serene is to carry out a local clinical trial

and seek approval from the Therapeutic

Goods Authority for the device to be used

in Australia. Meanwhile the company is also

working to expand sales in the US.

According to Blue Sky, demand for

cosmetic neurotoxin injections is growing

by up to 10 per cent a year and the market

is expected to reach more than $US3

billion by 2018.

Blue Sky Venture Capital investment

director Elaine Stead said introduction

of the NeuBelle device is expected to

segment the skin anti-aging treatment

market by providing an alternative to the

use of neurotoxins and providing longer

lasting treatments.

“In the US alone last year there were

more than 15 million cosmetic procedures

and the customer base is only going to

grow,” Dr Stead said. “While neurotoxins

remain the largest category within

cosmetic procedures, there is certainly

room for another product that offers a

toxin free, longer lasting and premium

quality option.”

According to Blue Sky, the current

investment climate in the US played

a large part in securing this investment

opportunity, with US investors reluctant

to fund medical device companies

generating less than $US20 million

annual revenue.


“This has left a range of de-risked and

well-managed technology companies

without investment options and struggling

to find funding,” Dr Stead said.

M.H. Carnegie & Co investment associate

Jarred Shein said the opportunity well suited

the investment strategies of the two investors.

“Carnegie and Blue Sky look for later

stage investments that are already

generating returns and Serene Medical fits

within our parameters,” he said.

Blue Sky Venture Capital also recently

invested in social media company HeyLets.

The company has developed a social app

for sharing and discovering experiences

such as a city’s best events and restaurants.

HeyLets is a Silicon Valley-based

business founded by Australians. The app is

already available in public beta in Australia

and is soon to be launched in

the US.

INVESTMENT ACTIVITYNEW PRIVATE EqUITY FIRM CLOSE TO COMPLETING FIRST DEAL

New Sydney private equity firm CoVest

Capital expects to soon convert a business

advisory role into its first investment.

The size of the investment has not been

disclosed but will be financed solely by the

firm’s partners.

CoVest has also linked with an

established private equity firm to raise

capital for another advisory client with

which it has been working since early

this year.

Meanwhile, the firm is planning to expand

its business model from a succession

capital equity focus to also include royalty

financing for growth companies.

Founder Mathias Kopp said the

impending investment will be an 80 per

cent stake in a well established ACT-

based electrical contracting business. The

business has achieved annual revenues of

up to $7 million but has a history of being

only marginally profitable and recently ran

into financial difficulties.

Kopp said the capacity of the business

had grown to projects of $2 million to $3

million but – as was often the case with

founder-managed enterprises – estimating,

purchasing and project management

procedures had not been improved in line

with that growth. Projects had therefore

not been properly managed to ensure

reasonable profit margins.

He said initial assessment had indicated

that the business had strong growth

potential and that its immediate problems

were mainly revenue and cost related and

could be relatively easily addressed. CoVest

had then reached agreement to enter

into its standard 100-day owner-financed

management advisory program (APE&VCJ,

Jul 14). The size of the task had, however,

resulted in that time frame having to be

extended but the firm was now close to

committing to invest.

A new business development strategy

had been introduced and an estimator

with experience within large electrical

contracting businesses had been hired.

Cost issues had been identified as

resulting from disorganised sourcing and

procurement. A number of employees

had been purchasing on an ad hoc basis

from a variety of suppliers with the result

that obtaining best prices had not been

a focus. The number of suppliers had

now been reduced and better terms

negotiated. This was expected to achieve

overall purchasing cost savings of 15-20

per cent.

Kopp said the new estimator had

improved project management procedures

but there was still some way to go to

ensure these were followed through

on-site. This was to be achieved by

remuneration packages for foremen being

renegotiated to reflect cost management

responsibility for the projects they

controlled. The foremen were being offered

lower base rates but with the opportunity

to earn substantial bonuses if targeted

profit margins were achieved.

CoVest’s other advisory role involves

a business “in the wider construction

industry” which has annual turnover of

around $40 million. Kopp believes this

could be increased organically to around

$150 million over time through the business

expanding its current single state focus to

include other states.

CoVest is now working on raising funds

for this business with a private equity

firm which has an investment in another

business in the same industry which could

eventually be a merger partner.

Meanwhile, Co-Vest is working on a new

strategy to provide royalty financing to

growth businesses.

This strategy was prompted by the

response of a potential investor to CoVest’s

$100 million fund raising for a succession

capital private equity fund launched earlier

this year.

“We need to grow confidence in our

business model to attract interest in

investing in a blind pool fund,” Kopp said.

“In my talks with investors it became clear

that there is reluctance to invest in private

equity funds in general, and first time funds

in particular, because of lack of control.

One investor suggested that this reluctance

could be reduced if we were able to provide

shorter term returns.”

He said investors had indicated their key

issues with private equity funds were lack

of transparency of investment performance

and the fact that money was usually locked

up for at least five years.

CoVest intended to address these issues

by offering investors opportunities to invest

deal by deal in providing royalty financing for

small to mid-size growth stage businesses.

There was a clear demand for capital

from these businesses, Kopp said, but with

valuation always an issue owners were

reluctant to part with equity. At the same

time banks, were not prepared to advance

adequate loan financing unless it could be

secured by personal assets.

CoVest’s solution would be to provide

selected businesses with access of up to

$5 million split between equity and loan

financing. The private equity firm would

require acquisition of a minority stake of at

least 10 per cent and then would provide

the rest of the funding as a secured or

unsecured loan. The business would pay

base yearly interest of 8-15 per cent in

monthly instalments and on top of that

a royalty on increased revenue of around

10 per cent.

The advantage to the business would

be a reasonable fixed interest rate with an

additional variable rate to be paid only as a

result of business growth. The advantage to

the investor would be a guaranteed stream

of returns, received quarterly in line with

usual private equity returns.

Kopp said he expected capital raising for

the blind pool fund to take time and in the

meantime the firm needed to build investor

confidence its business model. Deal by deal

investments would help achieve that.

He said CoVest was currently close to

entering into third a advisory/potential


investment arrangement and had strong

additional dealflow. He anticipated the

firm might need to complete as many as

six deals before closing the planned $100

million fund and was confident this could

be achieved.

NEW FUNDS & FUNDRAISINGSENERGY INVESTOR CLOSES $US3.4bN FUND

Energy specialist global funds manager

First Reserve has closed a new private

equity fund at $US3.4 billion, according to

private capital investment website Privcap.

The final close of First Reserve Fund XIII

brings to about $US6 billion the capital

raised by the manager so far this year.

In June, First Reserve announced the

closing of an energy infrastructure fund at

$US2.5 billion.

First Reserve’s thirteenth fund is down in

size from its previous private equity fund

which raised $US9 billion in 2008. The prior

fund to that, raised in 2006, has to date

registered disappointing returns.

According to Privcap, First Reserve

president Alex Krueger has acknowledged

that the firm faced challenges in its latest

fundraising as a result of investments it

made immediately prior to the global

financial crisis.

Privcap quoted Krueger as saying that

since 2008 the firm had eliminated buyout

investments in the power and renewable

spaces, both of which it had entered

relatively recently (First Reserve was

founded in 1983).

In 2010 (APE&VCJ, Jun 10) First Reserve

took a majority stake in Perth-based

resources sector engineering company

Calibre Global (ASX: CGH). First Reserve is

also a partner with American Metals & Coal

International (AMCI) in Sydney-based coal

mining investments vehicle Southern Cross

Coal Holdings.

INVESTEE NEWSWATER FILTRATION TECHNOLOGY LICENSED TO INTERNATIONAL COMPANY

University of South Australia

commercialisation company ITEK has

licensed a water filtration technology

to a Singapore-based company with

international operations.

The hydrophilic (water-loving)

technology was developed at the

university’s Ian Wark Research Institute.

The technology involves applying a special

polymer coating to stainless steel or

plastic mesh to produce highly effective

water filters. The filters retain oily matter

while allowing water to pass through.

The process to produce the filters is

relatively simple enabling large scale

production at low cost while the filtration

process works at very low pressures,

effective even gravity driven.

This makes the technology scalable

and affordable for use in common

scenarios such as separating oil and water,

when water has been contaminated,

for recovering oil after spills and for

decontaminating industrial waste.

The licensing agreement allows a

fully-owned subsidiary of Singapore-

based global water services company

Hyflux to further develop the technology

for use in water treatment products.

Hyflux has operations in South-East

Asia, China, India, the Middle East and

North Africa.

ITEK chief executive Dr Stephen Rodda

said the Hyflux licence was global but

applied only to water treatment leaving oil

spillage remediation and decontamination

of industrial waste for further licensing.

He said ITEK was already in discussions

for use of the hydrophilic technology

in these areas. The technology is covered

by specific patents in each of the three

applications.

Rodda said: “We believe this approach,

which takes this unique South Australian

development into three separate markets,

will both maximise the return for our

investors and reduce the risk of the

commercialisation failing to proceed.”

Since its establishment in 2000, ITEK

has achieved an internal rate of return

(IRR) of more than 50 per cent. During

the past three years, ITEK has added six

new companies to its investment portfolio,

negotiated 26 licensing deals in Australia

and overseas, supported capital raisings

of more than $14.5 million for investee

companies and helped the University of

South Australia secure industry partner

support collaborations worth more than

$12.5 million.

NEW FUNDS & FUNDRAISING$US3.9bN FINAL CLOSE FOR ASIAN REGIONAL FUND

Carlyle Group (NASDAQ: CG) has achieved

an above target $US3.9 billion final close

for its new Asian region fund, Carlyle Asia

Partners IV (CAP IV).

The raising exceeds the target of $US3.5

billion and is more than 50 per cent larger

than the predecessor fund, CAP III.

CAP IV will make control and significant

minority investments in well established

companies across the Asian region with

the exception of Japan which Carlyle

addresses separately.

The final close for CAP IV, which was

announced on 8 September, brings

Carlyle’s assets under management in

Asian funds, including Japan, to $US13.6

billion. These funds are invested in five

funds across buyout, growth businesses,

RMB (Chinese currency denominated) and

real estate strategies.

Managing director and co-head of

Carlyle’s Asia buyout team X. D. Yang said:

“We believe that the regional economy

will continue to grow much faster than the

rest of the world. The rising middle class

and their demand for better products

and services are key drivers of these

investment opportunities.

“With a focus on opportunities in the

consumer and retail, financial services,

TMT and healthcare sectors, we will

work to build on the strong track record

of our previous funds for our investors.

We will leverage Carlyle’s deep industry

expertise and global network and seek

to create value for our investors and

companies we invest in through the

insight and execution of our local teams

in the local markets.”

Carlyle co-chief executive David

Rubenstein said Carlyle, which has been

investing in the Asian region since 1998,

had been a pioneer of private equity

investing in Asia and its Asian investments

had created significant value for investors.

“We are excited about the great

opportunities we see throughout Asia,”

he added.

CAP IV made its first investment in

May in security company ADT Korea. In

August, the fund invested in Ganji.com, a

Beijing-based online and mobile accessible


lifestyle information and classified

advertising business.

The Carlyle Asia buyout team has

44 investment professionals in eight

offices in Beijing, Hong Kong, Jakarta,

Mumbai, Seoul, Singapore, Shanghai, Tokyo

and Sydney.

INVESTEE NEWSVENTURE-bACKED SOFTWARE COMPANY ON ACqUISITION TRAIL

Venture-backed software company

Atlassian has made two recent acquisitions

according to S&P Capital IQ.

The acquisitions are German company

tape.io GmbH and Australian company

Wikidocs.

US venture capital firm Accel Partners

invested $60 million in Atlassian’s Series

A round in 2010 and earlier this year

global investment manager T Row Price

and San Francisco-based Dragoneer

Investment Group invested $US150

million for a 4.5 per cent stake, implying a

$US3.5 billion valuation for the company

(APE&VCJ, May 14).

Atlassian produces issues-tracking,

collaboration and development tools that

are used by software developers in about

35,000 companies around the world.

Founded in Sydney in 2002, Atlassian

incorporated in the UK earlier this year

although it still has most of its employees

in Australia.

NEWSSUPER FUND INVESTS IN US MICRO CAP LISTED EqUITIES

The Catholic Superannuation Fund (CSF)

has made a seed investment of $90 million

in a new Australian managed investment

scheme which will invest in US micro cap

listed equities.

The scheme, the THB US Micro Cap

Fund, has been set up by Sydney-

based alternative investments advisory

and marketing firm Brookvine and

Connecticut-based equities funds

manager Thomson Horstmann & Bryant

(THB). The scheme will be managed by

THB, which has funds under management

of about $US1.5 billion invested in US

listed micro and small-cap stocks.

CSF is the first investor in the THB US

Micro Cap Fund.

CSF chief investment officer Garrie

Lette said few institutional investors

have dedicated investments in US micro

cap equities. “Yet with micro caps

being around half of all publicly traded

US companies, incorporating them in

a broad equities program expands an

investor’s opportunity set and, with the

benefit of time, should add to long-term

returns.”

THB principal Christopher Cuesta

welcomed the investment and said his

firm looked forward to working with

more Australian and New Zealand

investors over time.

The Australian domiciled scheme

will act as a feeder fund to the

established THB US Micro Cap Fund.

An independent manager, THB has been

investing in the micro cap space since

the early 1980s. The portfolio of the THB

US Micro Cap Fund is well diversified,

holding around 115 stocks. The fund

typically considers investing in US listed

companies with market caps of up to

$US500-$US600 million but tends to

focus on smaller micro cap companies

as pricing inefficiencies are often

greatest for these.

Visiting Australia in February, Cuesta

said THB followed a number of private

equity principles in its investing; it

only invested in companies to which it

ascribed higher valuations as private

companies than their listed market caps

and it expected senior managers to

be heavily invested in their companies.

Unlike private equity, however, THB

placed no time limit on its investments.

Brookvine chief executive Steven

Hall said his firm had carried out due

diligence on THB before entering into a

distribution arrangement for Australia

and New Zealand early this year. He said

Brookvine had been impressed by the

size and experience of THB’s investment

team and by the firm’s specialisation in

the hard to access smallest company

section of the US sharemarket.

“THB is differentiated by the

consistency of its track record. Market

liquidity is ample, trading costs are

low, broker coverage remains light and

market inefficiencies are there to exploit,”

he added.

NEWSFLOAT ExITS DOMINATE 2014 AVCAL AWARDS

Exits achieved as a result IPOs and floats

on the ASX dominated this year’s AVCAL

Awards presented at AVCAL alpha last

month (September).

Pacific Equity Partners (PEP) won the

Award for the Best Management Buyout

Over $500 million for its investment in

Asaleo Care.

PEP invested $467 for a 50 per cent

stake in the business, then SCA Hygiene,

in January 2012. Australia’s largest private

equity firm exited its investment when the

company was listed on the ASX in June

this year raising about $655.8 million.

Asaleo (ASX: AHY) makes a range of

mostly paper-based personal hygiene

products, including Sorbent tissues,

which it supplies across Australia,

New Zealand and Fiji. During the

period of its investment, PEP and its

investment partner Swedish company

Svenska Cellulosa Aktebolaget (SCA)

provided additional investment of

about $150 million most of which went

into upgrading the company’s Box Hill,

Victoria, plant.

The Award for the Best Management

Buyout between $150 million and $300

million went to Quadrant Private Equity

for its investment in Burson Auto Parts.

Quadrant invested in October 2011in a

deal which valued the business at about

$148 million. The mid-market firm partially

exited its investment when the company

was listed on the ASX as Burson Group

(ASX: BAP) in April this year. The float

gave the company an initial market

capitalisation of $335 million.

In the float, Quadrant reduced its stake

from 86.2 per cent to 19.9 per cent for a

return of $32.12 million.

Crescent Capital Partners won the

Award for the Best Management Buyout

between $75 million and $150 million

for its investment in travel insurance

company Cover-More.

Crescent acquired 80 per cent of

the business from the founder in 2009.

Together with the founder, the private

equity firm then worked on improving

Cover-More’s services and expanding into

Asian markets.


Cover-More (ASX: CMO) was listed on

the ASX in December 2013 with Crescent

reducing its shareholding from almost 83

per cent to 13 per cent.

The Award for the Best Management

Buyout under $75 million went to

Anchorage Capital Partners for its

investment in electronics retailing chain

Dick Smith.

Anchorage acquired Dick Smith from

Woolworths (ASX: WOW) in November

2012 recognising the business as a “fallen

angel” turnaround opportunity despite

negative sentiment toward the retail sector

at the time.

The turnaround specialist private equity

firm paid $20 million in a deal which

entitled Woolworths to a share of any

future capital gains on the sale of the

business. Eight months later, Anchorage

negotiated a $74 million deal to end that

agreement.

Dick Smith (ASX: DSH) was floated

on the ASX in December 2013, with

Anchorage retaining a 20 per cent stake in

the business.

After selling that stake last month (see

separate item this issue) for more than

$100 million, Anchorage achieved a gross

return on investment of close to five times

over about 21 months.

The Best Early Stage Award went to

Brandon Capital Partners for its investment

in Fibrotech.

Fibrotech is developing drugs for the

treatment of organ scarring – fibrosis – the

underlying cause of a number of major

diseases of the kidneys, lungs and heart.

The development process is based on

work by scientists at St Vincent’s Institute

of Medical Research.

Fibrotech received seed funding from

the Medical Research Commercialisation

Fund (MRCF) managed by Brandon

Capital and from Uniseed. Without this

funding the company would not have

been able to pursue its drug development

program.

Fibrotech was acquired by global

specialty pharmaceutical company Shire

plc (LSE: SHP, NASDAQ: SHPG) in May

this year for an initial $US75 million with

contingent payments to follow based

on achievement of development and

regulatory milestones (APE&VCJ, Jun 14.)

In addition to providing seed and

development capital, Brandon co-located

Fibrotech at its Melbourne offices and

actively guided the company through

pre-clinical and clinical trial programs.

Brandon partner Dr Chris Nave, principal

executive of the MRCF, played a key

operational role in developing Fibrotech

as a viable business and in negotiating

its sale. He attended all key partnering

meetings with Fibrotech’s chief executive

and provided advice through the sale

negotiation process.

The Michael Hirshorn Award, honouring

a private equity or venture capital-backed

business the products or serviced of

which have been instrumental in making

a significant community contribution,

went to Ironbridge Capital and its former

investee company Global Renewables.

Global Renewables operates an

advanced technology putrescible waste

recycling plant at Eastern Creek in western

Sydney. The plant diverts away from landfill

disposal about 60 per cent of the waste it

processes.

Ironbridge invested $57 million in

December 2010 to buy the business in

partnership with the chief executive.

Global Renewables was sold to Palisade

Investment Partners for an undisclosed

sum in late 2013 (APE&VCJ, Dec 13).

A special Chairman’s Award was

presented to Anacacia Capital in

recognition of its investment in baby food

company Rafferty’s Garden.

The smaller business specialist private

equity firm made an undisclosed

investment in Rafferty’s Garden in 2010.

Anacacia exited the business when it was

sold to UK-based PZ Cussons Plc (LSE:

PZC) for about $70 million in mid 2013

(APE&VCJ, Jul 13).

A Lifetime Contribution Award was

presented to Judith Smith, formerly head

of private equity at IFM Investors.

Sandy Lockhart of Next Capital said

Smith had been one of the pioneers of

institutional investment in private equity in

Australia. She had contributed significantly

to the development of the industry and

her advice had helped shape the careers

of many people who are key figures in the

industry today.

Jon Schahinger of Pomona Capital said

he had first met Smith in the early 1990s

and had immediately been impressed by

the way she always cared strongly about

every role she took on. He said Smith’s

work on the AVCAL Standards Committee

had left a lasting mark of clarity that was

often remarked on by overseas limited

partners.

Thanking AVCAL members, Smith

said she was completely overwhelmed

by the special recognition. She said

she had enjoyed every moment of her

career in investment which had started

at National Mutual and had led to her

long involvement with private equity

and venture capital at IFM. The industry

had changed a lot since she started,

she said. She felt some disappointment

that Australian investment institutions

had moved from local to predominantly

international private equity investing but

recognised that the industry had become

global and capital to invest in Australian

business was now subject to global

competition.

Capital raising had, however, never

been easy and was always made a little

easier by good management, with a little

luck always welcome. The opportunity

of investors to contribute to building

successful businesses, however, made it

all worthwhile.

NEWSASIAN VENTURE CAPITAL INVESTMENT ACCELERATING

Venture capital investment in Asia has

accelerated after a period of slower

fundraising and investment, according

alternative assets research organisation

Preqin.

This acceleration has been driven by

expansion of markets outside Greater

China with the strongest expansion in

emerging economies in North-East and

South-East Asia. (Preqin does not include

Australia and New Zealand as part of the

Asian market.)

In calendar year 2014 to 1 September,

venture capital investment across Asia

had already reached $US10.5 billion, up

from $US6.3 billion for the whole of 2013.

Private equity buyout deals had also

increased with $29.6 billion in investment

recorded in 2014 to 1 September

compared to $US25.7 billion for the whole

of 2013.

Region by region across Asia, venture

capital investing has shown the strongest


proportionate growth with private equity

buyout activity falling in some regions

while growing in others.

So far this year Greater China has

seen the highest level of private equity

buyout activity with the year’s deals at

a new record level of $US16.7 billion by

1 September. Venture capital investment

was also up strongly with $US5.7 billion

invested in 189 deals. This compared with

a total of $3.3 billion for the whole of 2013

but was still well below the high of $US7.7

billion invested in 2011.

Across North-East Asia, venture capital

investing has grown significantly over the

last few years with year-on-year growth

being achieved each year since 2010 and

the total for 2014 already at $US300

million by 1 September, compared with

$US400 million for the whole of 2013.

Meanwhile, buyout activity has fallen since

topping $US8 billion 2010 and is likely to

be lower than the $US5.5 billion recorded

last year.

South Asia has seen a similar pattern

with the number of buyout deals and

aggregate values falling significantly

over recent years from 173 deals valued

at $US5.0 billion in 2012 to 136 valued

at $US3.6 billion in 2013. In 2014 to 1

September there had been a total of 77

deals valued at $US2.5 billion. Meanwhile,

$US2.7 billion had been invested in 231

venture capital deals, up from $US1.7

billion invested in 346 deals over the

whole of 2013.

Within ASEAN nations, venture capital

activity has fallen back this year after

record activity in 2013. Over 2013, almost

$US921 million was invested in 104 venture

deals. To 1 September this year, 44 deals

worth $US131 million had been recorded.

Buyout deals had, however, already

reached a new record high of $US5.4

billion compared with the previous record

of $US4.7 billion in 2011.

In this fourth annual special report on

Asia, Preqin notes that globally limited

partners’ (LPs) appetite for Asia has waned

in the past two or three years although the

strong long-term macroeconomic story for

Asia remains unchanged.

Preqin also notes that while the current

20 largest private equity firms – measured

on capital available to invest – comprises

16 based in the US and four based in

Europe, Asia’s growth will ensure the

emergence of a first Asian entry in the top

20 within five years.

Preqin’s survey of Asian LPs found that

49 per cent of respondents thought that

Asia, with some specifically nominating

South Asia and South-East Asia,

presented the best opportunities in the

current financial climate, an unsurprising

finding as investors generally prefer to

invest domestically.

A large proportion of respondents

(37 per cent) favoured North America,

and 30 per cent perceived Europe to hold

the best investment potential,

with a number highlighting Western

Europe to be a promising hub for

private equity.

The survey found Asia-based LPs to

be generally optimistic that investment

opportunities can be found all over the

globe, as indicated by 40 per cent of


respondents stating that they will not be

avoiding because of the current financial

climate any countries or regions where

they would previously have invested.

Notably, however, 20 per cent felt that

the regions outside of North America,

Europe and Asia (with a number singling

out South America and Africa) are

unappealing in the current investment

environment, while a similar percentage

indicated that they would temporarily

avoid locations such as China, Japan, India

and other emerging markets.

A large majority of Asia-based LPs (91

per cent) agreed that private equity and

venture capital investing was growing

in importance as a component of their

portfolios.

These LPs cited portfolio diversification,

greater returns, access to capital for

small- and medium-sized enterprises,

and economic development as reasons

for their participation in private equity.

The increased interest in the asset class

was bolstered by recent events such as

political changes in Indonesia and India,

the effects of Abenomics in Japan and the

opening up of Myanmar, developments

which all contributed to a positive outlook

for the Asian economy.

Preqin concludes that, looking forward,

Asia-based investors will continue to play

an indispensable role in the private equity

market worldwide.

PERFORMANCESTART-UP ACCELERATOR RETURNS ALMOST SEVEN TIMES INVESTMENT

Myer Family Investments Pty Ltd and

Adelaide technology entrepreneur Simon

Hackett have led a $5 million investment in

technology start-up accelerator BlueChilli.

Blue Chilli intends to use the new

capital to increase its capacity to provide

services to technology start-ups as well as

corporations planning to introduce start-

up style innovation programs.

Sydney-based BlueChilli was founded

in 2012 with financial backing from Future

Capital Development Fund. Future Capital,

a Pooled Development Fund, will exit the

business as a result of the new investment.

No post-investment valuation of Blue

Chilli has been disclosed but Future

Capital chairman Domenic Carosa said the

investment had returned a 6.67 multiple in

just over two years.

BlueChilli founder and chief executive

Sebastien Eckersley-Maslin said: “While

the scale of the investment may be

the headline in the Australian start-

up community, it’s really who our new

investors are which is the most significant

aspect of the announcement.

“Simon Hackett is one of Australia’s

most successful technology entrepreneurs,

and the Myer Family is one of Australia’s

most iconic investing families. We’ve been

able to demonstrate a uniquely viable

model for creating a thriving portfolio

of more than 40 new tech start-ups in

two years. The investment signifies their

support for our plans to scale our model

here and overseas.”

Deputy chairman of Myer Family

Investments Peter Yates said: “We are

delighted to support domestic innovation

through this meaningful investment and

look forward to working with BlueChilli

as it enables Australian technology

innovation.”

Simon Hackett, who founded internet

service provider Internode, said his

investment reflected his interest in

supporting the best avenues for growing

the Australian tech start-up economy.

“While we wait for Australia to take

concrete steps to support the growth

of the local technology industry, I’ve

been working with a number of early-stage

Australian tech start-ups to help them

reach their goals,” he said. “I’ve enjoyed

working with Sebastien in an advisory role

and it’s great to be able to help BlueChilli

roll out to meet demand, now we’ve

validated the core model.”

BlueChilli has so far built a portfolio

of more than 40 early stage technology

start-ups.

INVESTMENT ACTIVITYASIAN FIRM RE-INVESTS IN PERTH-bASED CAFéS OPERATOR

Kuala Lumpur-based Navis Capital

Partners has invested in Perth-based

Dôme Coffees Australia Pty Ltd for a

second time.

Dôme is an established casual dining

restaurant operator and franchisor

with a total of 110 cafes in Australia, South-

East Asia and the Middle East where it

has outlets in Bahrain and the United

Arab Emirates.

Navis took a 77 per cent stake in

Dome in December 2003 through its

Navis Asia Fund III and successfully exited

the business in 2008 to management

and Perth-based investment firm

Viburnum Funds.

According to Navis, the new investment

involved Navis , through its Asia Fund VI,

purchasing a “significant equity interest in

Dôme and backing the same management

team that it worked with in 2003”.

Navis founding partner Nicholas Bloy

said: “We have known the company and

management for a long time. They have

continued to successfully build on the

business with uninterrupted earnings

growth throughout both our previous

tenure and that of Viburnum Funds over

the last six years, which is a remarkable

achievement. We believe that today there

are three distinct opportunities for Dôme;

firstly to consolidate its leading position

in Australia, secondly to add momentum

to its growth trajectory in South-East Asia

and the Middle East and thirdly to build on

the existing Dome guest experience with

compelling new products and services.”

Navis managing director Nigel Oakley

said the company’s management team

members were excited about the next

phase of development in partnership

with Navis.

“We worked exceptionally well with

them in the past and know that they will

bring deep knowledge, experience and

capital that will assist greatly in our growth

journey over the next few years,” he said.

NEWSNEW ADVISORY AND INVESTMENT bUSINESS

Angel investor Les Szekely has linked

with fellow investor and corporate

adviser Howard Leibman to form a new

technology advisory and investment

business, Equity Venture Partners.

The partnership’s portfolio has been

seeded by bringing together the two

investor’s current investments.

Leibman said the business will continue

to focus on investing at a very early stage

in disruptive online start-ups and had the


capacity to provide follow-on funding over

several rounds.

Formerly a senior tax lawyer with

Deloitte, Szekely is a member of Sydney

Angels and been investing in start-ups

for about 15 years. A number of his

investments have gone on to become

valuable businesses, one of the most

recent being online hotel bookings

business SiteMinder.

Leibman began his career as an

engineer with General Electric Company

and served for five years as head of

corporate development for NASDAQ listed

HeartWare International. In recent years he

has worked as a corporate adviser and in

2010 co-founded Growth Equity Partners

with Brad Ross-Sampson.

That partnership was ended amicably

in June when it became clear that while

Ross-Sampson wanted to focus on the

“bigger end of town” Leibman was more

interested in working with technology-

based start-ups.

Leibman said he and Szekely had

been involved with the same early

stage businesses a few times in the past

and had found their preferred areas of

responsibility meshed together well.

While Szekely liked to focus on financial

structure, strategy and capital raising he

preferred to be involved in day to day

advising on operational matters.

The concept of Equity Venture Partners

had gradually taken shape to provide

these services.

Leibman said the investment side of the

business differed from many other early

stage specialists in that it preferred to

invest at a very early stage with amounts

up to $500,000 but then had the capacity,

primarily through Szekely’s networks, to

continue investing over several rounds up

to $2 million dollars.

As the partnership built up its client base

he expected it would develop its advisory-

based business model with possibly most

investments eventually following on from

advisory relationships.

He said entrepreneurs should recognise

the value of paying very modest monthly

retainers to access advice as needed from

people with experience in developing

successful start-ups while at the same

time receiving ongoing assistance in

finding investors. Equity Venture Partners

would also be able to provide services as

needed such a his services as an external

chief financial officer.

When the business was prepared

to recommend investment in a client

business, it would anchor the round by

making its own investment.

So far, Equity Venture Partners has ten

investments in its portfolio: BeattheQ,

rezdy, spoonfeedme, conTgo, Alternative

Media, SiteMinder, DesignCrowd, Oneflare,

booodl and Hotel Club.

Oneflare aims to become Australia’s

dominant online marketplace for local

services. More than 50,000 businesses are

already registered on the site. In July 2013,

Szekely led an angel syndicate to become

Oneflare’s first external investor. In July this

year, Equity Venture Partners acquired the

interests of several minority shareholders

to become the company’s largest non-

founder equity holder.

In 2012, Leibman was a co-founder and

early funder of booodl an online social

network platform on which people list

items they own or would like to obtain. The

business has attracted some high profile

investors including James Packer and Paul

Bassat of Square Peg Capital.

SpoonFeedMe is a very early stage

online learning program which draws on

the experiences of students to create

online tutorials tailored to individual

courses at specific universities.

As Leibman said, it is at a very early

stage but has great potential, with the

right advice.

NEWSIN MEMORIAM: DR DAVID EVANS

Uniseed’s inaugural chief executive, David

Evans AM, passed away on 19 September.

Dr Evans’ vision and passion were

integral in the formation of Uniseed,

Australia’s first university-based venture

capital fund.

The fund was launched in 2000 as

a $20 million venture jointly funded

by the universities of Queensland and

Melbourne with the assistance of the

commercialisation bodies UniQuest and

Melbourne Enterprise International (now

UoM Commercial).

Evans served as CEO of Uniseed from

its inception in late 2000 until June 2002

after leaving the position of managing

director of UniQuest, a position he had

held from 1994. Under Evans’ leadership

in that role, the commercial agreement

between University of Queensland and

CSL (ASX: CSL) regarding the Gardasil

cervical cancer vaccine had been executed.

Apart from establishing the firm

foundation upon which UniQuest and

Uniseed were able to grow into one of

Australia’s most successful university

commercialisation partnerships, Evans

helped launch many innovations over his

career. These included the technology

based on University of Queensland

research which can be found in two-thirds

of the world’s magnetic resonance imaging

(MRI) machines. He was chairman of

Magnetica from 2004-2009.

Evans mentored many of the

commercialisation professionals now

leading Australia’s efforts to promote our

technical innovations globally, including

technology transfer specialists, venture

capitalists, intellectual property advisors

and researchers.

Prior to becoming involved with research

commercialisation at the University of

Queensland, Evans was chief executive of

university partnerships at the University of

New England from 1989-1994.

He was also known for his participation

in “the mother of all demonstrations” back

in 1968 when Doug Engelbart showcased

the computer mouse and the dawn of

interactive computing”.

Evans held a BE from the University

of NSW and MS (Engineering-Economic

Planning), AM (Economics) and PhD

(Engineering) degrees from Stanford

University.

In the 2013 Australia Day Honours

List, Evans was named a Member in the

General Division of the Order of Australia.

His citation was for “significant services

to science and innovation through

commercialising and developing new

technologies.”

INVESTMENT ACTIVITYMEzzANINE CAPITAL PROVIDED TO NICHE FINANCE bUSINESS

Wingate House has provided mezzanine

capital to QuickFee to help the niche

finance business rapidly grow its

lending book.


Details of the transaction have not been

disclosed but it is believed to include a

margin on money lent and an option to take

an equity stake in the business.

QuickFee provides short term financing

to professional services firms, mostly

accountancy practices.

The David Smorgon family office,

Generation Investments, which is chaired

by Wingate Group managing director Farrel

Meltzer, holds a significant stake in QuickFee

and is a co-investor with Wingate Group in

property deals.

Legal firm Kliger Partners acted for

QuickFee and Herbert Smith Freehills for

Wingate House.

Melbourne-based Wingate Group recently

completed its biggest property acquisition

to date, a large commercial property on

Sydney’s North Shore. In partnership with

Australasian Property Investments Limited

(APIL),Wingate paid $96.4 million for

Charter Grove, a seven-storey campus

style property on two acres (0.8 hectares)

fronting Christie Street, St Leonards. The

vendor was Charter Hall Office Trust.

The property was acquired on a yield of

9 per cent.

According to Meltzer, Charter Grove offers

the best of both worlds, a solid tenancy

profile delivering high, stable, income and

substantial potential for capital upside as a

result of possible rezoning to allow for high

density residential development as has been

achieved nearby.

Meltzer said the Charter Grove investment

is modestly geared with Wingate, APIL,

partners and co-investors providing equity

of $60 million.

INVESTEE NEWSDRUG DEVELOPER ON TRACK FOR US APPLICATION

Positive results from clinical studies have

kept OneVentures and Blue Sky Venture

Capital investee company Hatchtech on

track to make a New Drug Application

to the US Food and Drug Administration

(FDA) in the first half of next year.

Last month (September) the company

announced positive results from two

pivotal Phase 3 clinical studies evaluating

its head lice treatment.

The studies, conducted according to

a Special Protocol Assessment (SPA)

agreement with the US Food and Drug

Administration (FDA), achieved their pre-

defined primary and secondary endpoints.

Hatchtech chief executive Hugh

Alsop said: “This is a very exciting result,

providing clear evidence in support of the

safety and efficacy of Xeglyze Lotion, as

well as the superior commercial potential

of the product. Success with these

studies now places Hatchtech in a strong

position to seek marketing approval in

the US as well as accelerate our plans for

commercialisation of Xeglyze Lotion.”

The studies found that:

• 81.5 per cent of subjects treated with

Xeglyze (formerly DeOvo) Lotion

were free of lice following a single

application and without nit combing.

• Xeglyze Lotion demonstrated to

be safe and well tolerated with no

treatment related serious adverse

events.

The company has registered Xeglyze

Lotion as a new trademark.

The two studies were carried out in the

US and involved 704 subjects across 14

clinical study sites. The studies involved

treating subjects aged from six months with

a single ten minute application to the scalp

and hair.

Xeglyze differs from current widely used

treatments for head lice in that it is effective

against lice and eggs (nits) so does not

require follow up treatment and nit combing.

Head lice have also developed resistance to

many currently available products.

The active ingredient in Xeglyze was

selected in 2005 based on University of

Melbourne research by Hatchtech founder

Dr Vern Bowles.

NEWSACCELERATOR PARTNERS WITH NRMA

Start-up accelerator Slingshot has

partnered with NRMA (National Roads

and Motorists’ Association) to develop a

program for technology entrepreneurs, the

Slingshot Jumpstart Program.

NRMA is Australia’s largest member

network with 2.4 million registered

members. The organisation owns a number

of well known commercial brands including

Thrifty car hire, motels chain Travelodge

and NRMA Road Assist.

Jumpstart is described as a mentor

driven program to assist technology

entrepreneurs who want to develop a

start-up or scale up an existing business

with the assistance of an innovative

partner with a massive customer base.

The program is to be run simultaneously

in Sydney and Newcastle.


www.slingshotters.com

PEOPLE MOVESSYDNEY FIRM APPOINTS INVESTOR RELATIONS MANAGER

CHAMP Private Equity has appointed

Richard Hanney as investor relations

manager.

Hanney joined Sydney-based CHAMP

from another Sydney private equity firm,

Ironbridge Capital, where he spent three

years in a similar position.

Prior to joining Ironbridge, Hanney

helped establish an internal fund raising

capability at Sydney corporate advisory

and investment firm Alceon. He also

previously worked at Babcock & Brown

where he was involved in fundraisings for

infrastructure and real estate strategies

across the US, Europe and Asia.

NEWSNSW ICT ENTREPRENEUR OF THE YEAR NOMINATIONS

New Zealand-founded technology

company PowerbyProxi has released

an evaluation kit for electronic devices

manufacturers to test its wireless charging

technology.

Nominations for the NSW ICT

Entrepreneur of the Year close on 8

October.

The award is to be presented by NSW

Minister for Finance, Dominic Perrottet,

at NSW State Parliament House on 6

November.

As last year, the presentation will be

preceded by a pitching competition open

to students of NSW universities.

The award is presented to the most

outstanding NSW (not necessarily resident

but with strong connections to the state)

ICT and digital media entrepreneur. The

award recognises a high achieving “mid


career” entrepreneur who, ideally, can

be demonstrated to have contributed to

the development of other entrepreneurs.

Selection is through an open peer

recognition system.

Last year the award was shared by

Naomi Simson of RedBalloon and Simon

Clausen of PC Tools.

Finalists will be inducted into the

awards’ “living hall of fame” alongside

names such as: Brandon Cowan, Daniel

Jarosch, David Jones, Jennifer Zanich,

Jodie & Michael Fox, John Anstey,

John-Paul Syriatowicz, Julian Tol, Justin

Simpson, Mike Aston, Richard White, Rick

Richardson and Scott Frew.

This year’s awards are sponsored so

far by VMware and the Australian

Computer Society.

To nominate, or for further information

including sponsorship opportunities,

contact Philip Takken: phtakken@deloitte.

com.au

PEOPLE MOVESbEN-MEIR NOW DIRECTOR OF ENTREPRENEURS’ INFRASTRUCTURE PROGRAM

Chief executive of Commercialisation

Australia, Doron Ben-Meir, has been

appointed director of the Entrepreneurs’

Infrastructure Program in the federal

Department of Industry.

Commercialisation Australia was closed

to new applications earlier this year prior

to the federal budget then transferring its

non-grants functions to the Entrepreneurs’

Infrastructure Program.

The $484.2 million Entrepreneurs’

Infrastructure Program provides advice,

assistance and tailored support to small

and medium businesses to improve

capability and competitiveness, facilitate

collaboration with research institutions and

accelerate the commercialisation of new

products, processes and services.

NEWSGROWTH COMPANY OF THE YEAR FINALISTS

Five companies have been selected as

finalists for this year’s Growth Company of

the Year award.

The companies are Findex Group, Five

D Holdings, Green’s Foods, RTC Facilities

Maintenance and InfoTrack.

Findex Group is the company behind

financial advisory services Financial Index,

Centric Wealth, Civic Financial Planning

and MOVO.

Five D Holdings, a corporate real estate

services business, was also a finalist in last

year’s awards.

Greens Foods is a former private equity

investee of CVC Ltd (ASX: CVC) and was

also formerly owned by Nestlé.

Newcastle-based RTC Facilities

Maintenance provides all trades services to

corporate and government clients.

InfoTrack provides specialised search

software for law firms and conveyancing

practices.

Four companies have been selected as

finalists for Growth Technology Company

of the Year: Health.com.au, Appen

Holdings, AussieCommerce Group and

Redbubble.

Language Technology company Appen

Holdings is an investee of Anacacia Capital

and was a finalist in the 2012 Growth

Company Awards.

Other awards to will be: Growth CEO of

the Year, Growth Company to Watch and

Exit of the Year.

The awards, which are selected by

an independent judging panel, will be

presented at a cocktail function at the

Westin Hotel, Sydney, on 16 October.

News Corp business writer Alan Kohler

will be master of ceremonies and Tim

Power, managing director of 3P Learning,

will be the keynote speaker.

The awards are co-sponsored by Sparke

Helmore Lawyers, Macquarie Capital,

Deloitte, Westpac Institutional Bank,

MYOB and the Australian Private Equity

and Venture Capital Association (AVCAL).

The Australian and Private Equity Media

support the awards as media partners.

For further information visit:

www.sparke.com.au/our-firm/initiatives/

australian-growth-company-awards

PEOPLE MOVESFOUNDER OF INFRASTRUCTURE FUND MANAGER RETIRES

Founder and managing director of

Infrastructure Capital Group John Clarke

has retired from full time duties with the

specialist fund manager.

Mr Clarke is to continue in a part-time

role as a non-executive director.

Current executive directors Andrew

Pickering and Tom Laidlaw have become

chairman and managing director

respectively. Former chairman Mike

Fitzpatrick has increased his day to day

involvement with the firm taking on

the role of chairman of the investment

committee.

Clarke founded the business as a

joint venture with ANZ – ANZ

Infrastructure Services – in 2000. In

2009, Clarke was part of a consortium,

led by current chairman Mike Fitzpatrick,

which acquired ANZ’s shareholding and

renamed the business Infrastructure

Capital Group (ICG).

Along with the board and management

changes, Clarke has reduced his interest

in ICG to 10 per cent with Fitzpatrick,

who already held the largest stake in the

business, and a number of key investment

personnel taking up the stock.

ICG has funds under management of

more than $1.4 billion.

INFORMAL VENTURE CAPITALFINANCIAL SERVICES ACCELERATOR CLOSES SECOND INTAKE

Australasian Wealth Investments Limited’s

(ASX: AWI) ventures accelerator closed

applications for its second intake at the

end of September.

INVESTMENT OPPORTUNITY

ONLINE BUSINESS - GLOBAL APPLICATION

Opportunity for tech-smart operator at minimal cost to run

business for two years, expanding consumer base through social

media and other marketing, view global license at end of term.

Please respond by email: [email protected]


Up to ten early stage businesses will

be selected for the financial services-

focused program.

Companies in the first intake will complete

their six-month program in November.

AWI Ventures invests $100,000 into each

selected business ($50,000 in cash and the

rest in services) for a 10 per cent stake.

Selected businesses are housed in AWI’s

Sydney CBD offices.


www.awiventures.com

CONFERENCES & ROUNDTAbLESCLOUD APPLICATIONS TO bE A THEME OF TECH PRESENTATIONS

Early stage businesses to present at this

year’s Tech23 event will include a number

based on big data technologies, location

services, enterprise applications and

healthcare software.

The most common theme among the

23 technologies is the use of in the cloud

data and services.

Technologies to be presented include

vehicle routing and scheduling from

Intelligent Fleet Logistics and smartphone-

enabled access control from LEAPIN

Digital Keys.

The sixth annual Tech23 event will be

held in Sydney on 23 October.

The event will feature five minute

presentations from each of the selected

companies.


www.slatteryit.com.au

PEOPLE MOVESSOVEREIGN WEALTH FUND APPOINTS NEW CHIEF INVESTMENT OFFICER

Dr Raphael Arndt has been appointed chief

investment officer of The Future Fund

succeeding David Neal who was promoted

to managing director in June.

Arndt was previously the fund’s head of

infrastructure and timberlands.

As chief investment officer, Dr Arndt now

has overall responsibility for leading the

investment team.

Stephen Gilmore, the fund’s head

of investment strategy, has taken on

additional responsibility for managing and

monitoring total portfolio risk settings.

Neal said the changes in responsibilities

would enhance the Future Fund’s

ability to interpret the broad investment

environment and exploit specific insights

from each asset class.

“The ability to bring these perspectives

together and collaboratively develop

investment ideas is a hallmark of our

investment approach,” he said.

The sovereign wealth fund has begun

a recruitment process for a new head

of infrastructure and timberlands. Until

an appointment is made, head of property

Barry Brakey will also be responsible

for leading the infrastructure and

timberlands team.

PERFORMANCEPRIVATE EqUITY bOOSTS PROFIT FOR MANAGED INVESTMENT COMPANY

Listed managed investment company

CVC Limited (ASX: CVC) has reported a

$25.4 million net profit to shareholders

after tax for the 2014 financial year –

compared to $9.3 million for 2013.

The direct contribution of private equity

was $2.8 million, down from $7.6 million

the prior year, but equity accounted results

added a further $13.2 million to the private

equity contribution.

CVC reported cash holdings of

$49 million which it said ensured it was

well placed to pursue new investment

opportunities as they emerged.

Following release of the preliminary

results, CVC announced sale of its

remaining shareholding in property

developer Villa World Limited (ASX: VLW)

for about $30.2 million.

FEATuRE


The sale by MLC Wealth Management

Limited of a large portfolio of

private equity investments gives a

glimpse into the largely opaque market

of secondary sales of private equity fund

investments.

Switzerland-based global asset manager

Partners Group Holdings AG (SWX:

PGHN) completed the acquisition on 9

September, according to S&P Capital IQ.

Financial details were not disclosed but

reports suggest the deal was worth at

least $750 million and possibly $1 billion

or more.

It is believed the portfolio largely

comprised investments in major buyout

funds, some possibly dating back to prior

to the global financial crisis.

MLC has declined to comment on the

deal but a spokesperson said the wealth

management firm remained committed to

private equity investing.

A decade or so ago, sales of private

equity fund investments were usually

regarded as indicating dissatisfaction

with the investments and probably the

investment class. Much has changed since

then with the development of a viable

global secondary market. Today, such

sales do not necessarily indicate a shift

away from investing in the sector or even

a reduction in allocation.

In this case, it is probable the sale

was initiated to rebalance MLC’s actual

commitment to private equity in line with

its target allocation.

A recent global survey by alternative

assets research house Preqin elicited

various reasons for institutional investors

to offload private equity fund investments

on the secondary market. These included:

meeting liquidity requirements (39 per

cent), rebalancing portfolios (27 per

cent), exiting poorer performing funds,

conforming to regulatory changes and

taking advantage of the high prices

currently available.

That last point is likely to have been

pertinent to the MLC transaction.

According to Preqin, as at May this

year, the secondary market global median

discount to net asset value of buyout

funds was 10 per cent, the lowest since

September 2007 when the median re-

entered discount territory after nearly three

years at premium values.

Local sources say Australian institutions

were offering private equity investments

for sale on the secondary market at

attractive discounts two or three years ago

but sales in the current environment would

most likely be at full value or close to it.

In that context, MLC’s sale could be a

case of locking in good returns now rather

than risking lower values before final

returns are due probably over the next five

years or so.

MLC was a pioneer of global private

equity investing among Australian

investment institutions. Under Charl

Pienaar, who was head of international

private equity from 1996 to 2007, the

wealth manager was building up a global

portfolio while many other institutions were

investing only in local funds. That strategy

was maintained under David Krasnostein,

who was MLC head of private equity

from 2008 to 2011. He described it as a

“global manager of managers” approach.

This involved investing in a range of

funds, funds-of-funds and co-investments

to achieve exposure to thousands of

underlying companies around the world.

But Krasnostein did make some changes,

for example expanding from predominantly

European and US investing to include

the emerging markets of China, India and

Brazil.

When Krasnostein left in May 2011, MLC

had $4.5 billion committed to private

SECONDARY MARKETSALES DYNAMICS

SECONDARY MARKET SALES

OF PRIVATE EQUITY FUND

INVESTMENTS DO NOT

NECESSARILY INDICATE POOR

PERFORMANCE. A RECENT

LOCAL TRANSACTION IS A

GOOD EXAMPLE.

BY ADRIAN HERBERT

FEATuRE


equity. Since inception the private equity

portfolio had returned about $1 billion

in cash, almost a three-to-one return on

investment.

MLC’s current head of private equity

Natalie Meyenn was appointed last year

and is believed to be maintaining the global

strategy but the secondary sale may have

been used to re-define the focus of that

strategy.

While the primary purpose of the sale

was probably to bring the private equity

portfolio closer to MLC’s overall portfolio

target allocation, the state of the market

suggests good returns would have been

achieved.

Partners Group must also have seen

good value in the deal.

For buyers, key drivers of value include

access to investments in mature private

equity funds where blind pool risk has

been eliminated, access to funds of

specific vintages, and to funds of leading

managers. Underlying investments in

mature funds will in many cases be through

their early J-curve periods of negative cash

flows and have reached growth phases.

Potential exits should therefore be much

closer and potential exit valuations much

clearer.

So buyers may use the secondary market

to widen the time span of their investments

focusing on proven well performing

vintages.

Sellers may use the secondary market to

generate returns at times of their choosing

rather than waiting for final distributions

when funds are wound up. This may, of

course, be prompted by underperformance

but not necessarily.

Buyers are, however, likely to want to

select individual fund investments rather

than buying a portfolio as offered. This can

have the unwanted effect of concentrating

sellers’ remaining investments in poorly

performing funds.

Secondary market sales of private equity

fund investments in Australia have trailed

the US and Europe but transactions have

gradually increased both in volume and

size. And this year could prove to be a

milestone with the possibility the MLC sale

might yet be eclipsed.

In June, Preqin reported that it believed

QIC had hired Cogent Partners to market

a portfolio valued in excess of $US1 billion.

Local sources are, however, uncertain

whether QIC is committed to selling and

have suggested this might be more a

pricing exercise.

Over recent years super funds including

UniSuper and Telstra Super, as well as

the state government-owned Victorian

Funds Management Corporation (VFMC),

have used the secondary market to

offload private equity fund investments

after deciding to cease investing in the

asset class. In the case of VFMC this had

followed, by its own assessment a period of

good returns from private equity.

Some of these investments are likely

to have been acquired by global fund-of-

fund managers but others were transferred

to other Australian investors. While

purchases would have been negotiated by

advisers, in a number of cases the advisers

were buying on behalf of other Australian

super funds including Health Super (prior

to its merger with First State Super)

Sunsuper and CSC (Commonwealth

Superannuation Corporation).

Some fund investments bought at

around net asset value a few years ago are

believed to have since been substantially

re-valued upwards by their new owners.

Globally, according to Preqin, secondary

market buyers of private equity assets

are predominantly public pension funds

(21 per cent), private pension funds

(13 per cent), asset managers (11 per cent)

and insurance companies (11 per cent).

Family offices have, however, also entered

the market.

Reasons given for investing in the

secondary market include mitigation

of the J-curve effect (36 per cent),

accessing top performing managers (31

per cent) and diversification of portfolios

by vintage year.

The increase in liquidity created by

a strong secondary market for global

private equity fund investments should

increase the confidence of Australian

institutional investors to allocate to private

equity bearing in mind that the long

holding periods of private equity funds is

often a major concern. This can only be to

the benefit of the industry as a whole.

FEATuRE


Industry association AVCAL has called

for the introduction of an Investment

Manager Regime in Australia as

outlined in the 2010 Johnson Report.

In its Round 2 submission to the Financial

System Inquiry, AVCAL says it is in full

agreement with the conclusion of the

Johnson Report that if Australia had access

to a broader set of appropriate vehicles

to sell into Asia – that were taxed on a

flow-through basis – then more collective

funds vehicles would be managed and

administered out of Australia.

AVCAL goes on to say: “It should also

be noted that the Board of Taxation’s

review of the tax arrangements applying

to Collective Investment Vehicles (CIVs)

was completed in December 2011 but the

report, and the Government’s response,

has to date not yet been released. The

considerable delay between reporting

and public release was a concern

pointed to in Parliament by the current

Government, when in Opposition, in

March 2013.”

According to AVCAL, the outcomes

of the Board of Taxation’s review are

important because the CIV of choice

domestically, apart from VCLPs, remains

a managed investment scheme taking

the legal form of a trust. Currently some

features of the Managed Investment

Trust (MIT) tax framework put

Australia’s funds management sector

at a competitive disadvantage in terms

of managing funds for offshore clients

as these clients have greater certainty

of flow-through tax treatment through

other international CIVs of choice such as

limited partnerships and limited liability

companies. These shortcomings and

uncertainties, AVCAL says, should be

addressed, in consultation with industry,

as part of the government’s ongoing

review of the MIT tax framework.

AVCAL says the reforms are also

important to our future capacity to attract

foreign investment into our economy. In

view of this, AVCAL recommends that the

government:

• Release the Board of Taxation’s review

of CIVs, together with its response to

the report;

• Provide legislative certainty for the

retention of character and source for

investors in MITs, and address other

areas of the MIT tax framework to

allow these vehicles to operate in as

similar a fashion as possible to how

international CIVs are taxed in other

jurisdictions; and

• Prioritise, as part of the proposed Tax

White Paper in the next two years,

the implementation of policies that

will support Australia’s capacity to

attract capital from domestic and

international investors through a

globally competitive environment for

collective investment management

activities.

Introducing this recommendation,

AVCAL notes that other submissions

received by the inquiry suggest that some

tax settings in Australia distort international

financial flows and restrict financial

integration and the inquiry has sought

further information on:

• What are the potential impediments

to integration, particularly their

relative importance, and the benefits

to the broader Australian economy

that can be demonstrated if they were

removed?

• Where is future Government

engagement needed to facilitate

integration with Asia?

SIMPLE RULE CHANGES COULD ACCESS FOREIGN CAPITAL

BY ADRIAN HERBERT

AVCAL HAS CALLED

FOR THE ADOPTION OF

RECOMMENDATIONS WHICH

WOULD REMOVE BARRIERS TO

FOREIGN INVESTMENT IN LOCAL

PRIVATE EQUITY FUNDS.

FEATuRE


Another topic addressed in the Round 2

Submission is “addressing barriers to the

growth of venture capital”.

AVCAL notes that the (Interim)

Report states that there are “very few

impediments” to superannuation funds

wishing to invest in venture capital

and that “superannuation funds could

consider investing in venture capital

funds as part of a broader approach to

diversifying their asset portfolios. This

may involve taking a broader view of their

investment options and require them to

engage the required expertise.”

AVCAL contends that there are in fact

significant impediments and these have

contributed to the decline in investment

by superannuation funds into local

venture capital funds.

A key impediment is investment scale.

AVCAL states: “Under the recently

introduced Stronger Super reforms,

trustees are obligated to consider scale

as part of their investment strategy

and decisions. With the rapid growth of

superannuation funds in recent years,

investments in Australian venture capital

funds are now generally considered “too

small” for large institutional super funds

to invest in. In 2004, the average super

fund’s mandate size was $65 million. By

comparison, the largest domestic venture

capital funds are only around $200 million

while most are around $50 million.

In 2011 AustralianSuper’s (the largest

domestic superannuation fund) average

mandate size was reported to be

$235 million. For efficiency, large global

institutional investors will often not even

consider investing in individual funds

that are smaller than $1 billion, even

if there are smaller funds offering

exceptional value.

In addition, early stage VC investments

are now often considered too high-risk for

most superannuation investors.

“These challenges are neither

insubstantial nor unique to Australia. To

address this, in most other developed

markets programs to encourage venture

capital investment have become a

core part of national economic policy.

Government co-investment programmes

in particular have been recognised as a

particularly powerful lever in attracting

both local and international institutional

investors in early stage ventures.

The case for government co-investment

in venture capital funds to help stimulate

investment in SMEs has been widely

accepted as a long term strategic

policy imperative in many countries,

despite many facing challenging

budgetary conditions. Examples of

such co-investment programs include

the New Zealand Venture Investment

Fund (NZVIF), Singapore’s Early Stage

Venture Fund (ESVF) scheme, Israel’s

Yozma program, the US Small Business

Administration’s $US1 billion Early

Stage Innovation Fund under President

Obama’s Startup America initiative, and

Canada’s Venture Capital Action

Plan announced in 2013.

AVCAL argues that one of the most

effective steps to encourage private

investment in venture capital and

innovative early stage companies would

be the introduction of a new innovation

policy that incorporates a Government

seeded translational innovation fund that

co-invests alongside private investors

(such as superannuation funds) in

venture funds that invest in Australia.

The risk and profit sharing structures

could be set up to incentivise private

sector investment without any significant

fiscal impact to the Government.

Similar structures have worked

successfully in the past, for example the

Innovation Investment Fund program

which helped provide early funding to

companies such as SEEK when they were

in their start-up phase.

AVCAL puts forward NZVIF as a case

study.

The New Zealand Venture Investment

Fund (NZVIF) was established by the

New Zealand Government in 2002 to help

build a vibrant venture capital market in

the country.

In the process of setting up NZVIF, the

question of whether it was appropriate

for a Crown-owned company to be

involved in venture capital investment

was carefully considered. The New

Zealand Government ultimately took a

decision that growth in this investment

sector was an important part of

increasing the available capital to young

innovative New Zealand companies

to enable them to grow and reach

their potential. NZVIF was established

“because the venture capital market in

New Zealand has been of a negligible

size for many years. What New Zealand

is doing is commonplace around the

world, where many countries have seen

the need for government investment to

act as a

catalyst in the development of venture

capital markets”.

To allow for independence and

continuity, NZVIF was set up to operate

as a private investment business,

developing and managing products

for the early stage and venture capital

investment markets. It operates as a

fund-of-fund, governed by a private

sector board of directors who have

oversight of an investment management

team that invests into venture capital

funds (and also partners with angel

investor groups) to drive investment into

young New Zealand companies with high

growth potential.

As an investor, NZVIF invests in line

with industry standard terms. As with

other normal investors in venture capital

funds, it takes an active role in monitoring

fund activity and tracking investment

performance.

NZVIF currently has $NZ200 million

under management, and has backed

companies such as cloud-based

accounting software company Xero.

As of end-2013, over 160 companies

have received investment from

NZVIF, and the tax paid back by

these companies to the New Zealand

Government now exceeds the amount

invested.

AVCAL also calls for simplification of

the tax treatment of VCLPs.

It notes that the (Interim) report

states that “the tax treatment of VCLPs

is complex and may be a barrier to

fundraising”.

AVCAL suggest that one of the most

significant measures that can be taken

to encourage investment in venture

capital and private equity in Australia

would be to introduce the tax reforms

recommended by the Board of Taxation

in its review of VCLPs in 2011.

FEATuRE


It says that in recent years the ability

to successfully raise new funds using

the VCLP structure has been severely

challenged due to uncertainty over the

tax treatment of different classes of

domestic and offshore investors into

VCLPs.

As the legislation currently stands,

foreign investors have certainty in respect

of capital account treatment, but a similar

level of certainty does not currently exist

for all domestic investors.

Minor legislative reform is needed to

remove this uncertainty for investors by

clarifying that gains from investments

through these vehicles would b e

classified on capital account for all

eligible domestic investors. This was also

recommended by the Board of Taxation

in its 2011 review.

Note: The full text of the submission can

be accessed via the AVCAL website:

www.avcal.com.au


REARVIEW MIRROR

5 YEARS AGO... OCTObER 2009SUPER FUNDS INVEST IN PRIVATE EqUITY SECONDARIES

Two super funds have recently invested in

private equity secondaries.

Western Australia’s $9 billion public

sector superannuation fund GESB’s

investment follows restructuring of its

asset allocation strategy to include higher

risk satellite strategies alongside exposure

to traditional asset classes.

Chief investment officer Sharon

Hicks said the fund was taking care to

ensure that non-core assets were classified

by their appropriate risk profiles rather

than just their potential for achieving high

returns.

She said the fund had participated

in some secondary private equity

transactions with other allocations

to unlisted assets to be made on an

opportunistic basis.

Unlisted property and infrastructure

were asset areas that were currently being

reviewed.

Hostplus, the $6.9 billion industry

superannuation fund for the hospitality,

tourism, recreation and sports industries,

has also made its first investment in private

equity secondaries via a $100 million

mandate to Partners Group.

Hostplus investments chief Sam

Sicilia said he believed the time was

right to invest in structured credit and

private equity secondary markets because

a number of distressed vendors were

selling off good assets at knock down

prices making it possible to cherry pick the

best assets.

10 YEARS AGO... OCTObER 2004$450M FINAL CLOSE FOR IRONbRIDGE

The first investments into the Australian

private equity sector by several of the

world’s largest private equity investors

contributed to a final close of $450 million

for Ironbridge Capital’s first LBO fund.

The Ironbridge Capital 2003/4 Fund had

declined oversubscriptions above $450

million as the fund had an initial target of

$300 million, said managing partner of

Ironbridge Capital, Julian Knights.

The Fund attracted commitments from

about 15 Australian and seven offshore

institutions, including the first Australian

commitments by the US-based CalPERS,

Netherlands-based AlpInvest and

Switzerland-based Partners Group. Another

offshore investor is GIC Special Investments

of Singapore.

Local investors include clients of

Wilshire Private Markets Group, Industry

Funds Management and Macquarie Funds

Management.

Mr Knights said Ironbridge worked hard

to interest the international investors and

made a number of overseas visits. The

investors were attracted by the perceived

opportunities in the Australian MBO market,

the strategic dealflow, the good returns

of recent times, and the less competitive

market here, he said. Although there is a

growing awareness of the opportunities in

Australia, it still takes a long time to attract

each new offshore investor.

Mr Knights said that locally there had

been an improvement in the fund raising

climate over the past 12 months and

that the recent returns of capital by the

buyout sector meant many investors were

cashed up.

The manager was able to negotiate

standard international terms and

conditions for the fund. Ironbridge is now

looking at incorporating a venture capital

limited partnership (VCLP) vehicle into

the fund. The VCLP structure was not

finalized when Ironbridge commenced

fundraising, but the VCLP’s $250 million

limit on assets could affect Ironbridge’s

activities as a medium to large buyout

firm. Ideally the VCLP needs to be a one-

size-fits-all-investors vehicle as investors

are uncomfortable with different vehicles

for different investors in a fund, said Mr

Knights.

Another argument to standardize the

VCLP is that offshore investors generally

have a large minimum amount they will

invest and are unlikely to meet this solely

with commitments to Australian early

stage funds. Large MBO exposure is

needed to reach their minimum threshold.

The Fund’s final close was held on

September 24, well ahead of the original

timetable, and followed the first close in

February this year and the second close

in May.

The Fund expects to be an active

investor over the next three to four years.

It has completed two investments so far –

hospitals group Affinity Health and back

packer group ACB.

20 YEARS AGO... OCTObER 1994HAMbRO-GRANTHAM SUPPORTS WASTE RECYCLER AND OFFICE STATIONERY MbO

Hambro-Grantham Capital Ltd and

Hambro-Grantham Development Trust

have co-invested in two new investments:

to acquire a total 33 per cent interest

in leading waste recycling business,

Formark Pty Ltd, and a management

buyout of stationery and office products

distributor Pedersen Contact from Spicers

Paper Ltd.


REARVIEW MIRROR

* To access all editions of Australian Private Equity & Venture Capital Journal since July 1992, convert to our Archive Subscription. Short term – 30 day – Archive Subscriptions are also available.

Formark was formed to develop

innovative waste collection and recycling

systems. A division, Transport and Waste

Technologies (TWT), manufactures

waste compaction vehicles and recycling

plants and sells mobile waste containers

sourced from local and international

manufacturers.

The new capital will be used as

working capital to fund the company’s

large number of current orders and the

anticipated growth in sales for its SORT

waste management system.

TWT is claimed to be a leader in one

man automated collection, having recently

patented a unique twin level divided

collection vehicle after more than four

years of research and development.

The vehicle, together with divided

mobile garbage bins and purpose built

sorting facilities, create an integrated

multi- bin waste management system.

TWT says that the system, known as

SORT, has the potential to change the

way in which waste is collected around

the world.

The key difference from other systems

is the automatic separation of waste

materials at the kerbside, which avoids

contamination, and the safe transfer to the

twin level divided vehicle.

This process maximizes the quality

of the recyclable product and its value

to end users. For example, since paper

contaminated with glass will not be

accepted by paper mills as glass will

damage mill equipment, the process

avoids deliveries being rejected because

of contamination.

The Federal and State Governments

have targeted a mandatory reduction in

landfill volumes of 50 per cent from 1990

levels to apply by the year 2000. Without

this Sydney by 2008 would generate more

than 100 million tonnes of landfill wastes,

sufficient to fill Sydney Harbour.

TWT claims its SORT System enables

local Councils to achieve this landfill

reduction rate immediately.

In July TWT in association with Theiss

Contractors successfully commissioned

the first NSW contract for a divided

collection system and sortation plant for

the Wollongong City Council.

A SORT plant is being developed for

Browning Ferris Industries in Gosford, NSW

with an additional plant contracted for

Canberra.

Peter Johnson, a director of Hambro-

Grantham Management Ltd, said there is a

quiet revolution going on in waste disposal.

TWT’s systems allow Councils to increase

the participation of ratepayers in waste

recycling as well reduce waste going to

landfill.

“The good news for Councils and

ratepayers is that TWT’s SORT system

will provide households with a simple

but cost effective recycling service which

will maximize economic returns on the

recyclable elements while minimizing

landfill usage,” he said.

Export potential for the products is

high. TWT recently signed is first licensing

agreement, with Faun Umwelttechnik,

a leading German waste equipment

manufacturer. Negotiations are underway

for licences in the US and other European

countries.

Pedersen Contact

The total value of the Pedersen Contact

management buyout was $9 million.

The co-investment between Hambro-

Grantham Capital and Hambro-Grantham

Development Trust was on an equal basis

and involved an initial outlay of $4 million

in equity for 80 per cent of the company

with management providing $1 million for

the remaining 20 per cent.

The two development capital funds have

committed to provide a further $1 million in

equity for future expansion.

The management buyout team national

finance manager, general manager and nine

other senior staff.

Hambro-Grantham director, Peter

Wallace, who joins the Pedersen Contact

board, said the deal was not structured as

a traditional 1980s MBO as there was more

equity than debt to allow for growth.

Pedersen Contact is a distributor

of stationery and office products to

corporates, government and the education

sector. It has 150 staff and turnover is $50

million, making it one of the largest contract

stationers suppliers.

Electronic trading and vendor controlled

stock have assisted it to corner the large

corporate market. Its commercial and

government market has grown more than

20 per cent in the past 12 months.

Mr Wallace said that although the

stationery sector is not a high growth area,

the introduction of the retail superstore

concept through Coles Myer’s Office Works

would lead to industry rationalization.

If Office Works captures a significant

portion of the retail market, it will squeeze

many small and medium suppliers. The

additional $1 million in commitments would

therefore allow Pedersen Contact to expand

through acquisitions as well as through

aggressive marketing and other means.

Mr Wallace said the highly leveraged

buyouts of the 1980s have been replaced

with buyouts of companies with growth

potential and a more prudent level of

borrowing. He said that he expects

more growth buyouts to occur as larger

companies seek to realize non-strategic

activities.


COMING EVENTS

16 OCTOBER

GROWTH COMPANY AWARDS

PRESENTATION.

Sydney. Australian Growth Company

Awards.

www.sparke.com.au

21 OCTOBER

DEVICES & DIAGNOSTICS

PARTNERING FORUM – POSITIONING

FOR PARTNERSHIP: ENGAGING WITH

MEDTECH MULTINATIONALS.

Melbourne. BioMelbourne Network.

www.biomelbourne.org/events

21 OCTOBER

AUSTRALIAN SPORTS TECHNOLOGIES

NETWORK ANNUAL CONFERENCE.

Melbourne. Australian Sports Technologies

Network.

astn.com.au

23 OCTOBER

TECH23.

Sydney. Slattery IT.


23 OCTOBER

NZVCA ANNUAL PRIVATE

EQUITY & VENTURE CAPITAL

CONFERENCE 2014.

Queenstown. NZVCA

www.nzvca.co.nz

23 OCTOBER

BIOBREAKFAST - THE READINESS IS

ALL, MELBOURNE’S R&D CAPACITIES

IN EMERGING INFECTIOUS DISEASES.

Melbourne. BioMelbourne Network.

www.biomelbourne.org/events

4-5 DECEMBER

YOW! CONFERENCE (SOFTWARE

DEVELOPER EVENT).

Melbourne. Slattery IT.


8-9 DECEMBER


DEVELOPER EVENT).

Brisbane. Slattery IT.


11-12 DECEMBER


DEVELOPER EVENT).

Sydney. Slattery IT.


30-31 OCTOBER

WEB DIRECTIONS 2014.

Sydney. Web Directions.

www.webdirections.org

5-6 NOVEMBER

ALTERNATIVE INVESTMENTS 2014

CONFERENCE.

Sydney. International Business Review.

www.ibrc.com.au

6 NOVEMBER

NSW ICT ENTREPRENEUR OF THE

YEAR AWARDS.

Sydney. The Pearcey Foundation, Australian

Computer Society etc.

www.pearcey.org.au/New_South_Wales_

Pearcey

7 NOVEMBER

MELBOURNE ENTREPRENEURS

GALA DINNER.

Melbourne. Startup Victoria/Slattery IT.

www.startupvicgala.com.au/

16-19 NOVEMBER

AUSTRALIAN HEALTH MEDICAL

RESEARCH CONGRESS.

Melbourne. ASN Events.

www.ahmrcongress.org.au

24-28 NOVEMBER

ENGINEERS AUSTRALIA

CONVENTION 2014.

Melbourne. Engineers Australia.

www.engineersaustralia.org.au


ShARE ChART

LAST SALE AT END OF MONTH AUSTRALIAN LISTED PRIVATE EqUITY FUNDS/ INVESTMENT COMPANIES

INVESTORS/ MONTH Sept-14 Aug-14 Jul-14 Jun-14 May-14 Apr-14 Mar-14 Feb-14 Jan-14 Dec-13 Nov-13 Oct-13

PRIVATE EqUITY & VENTURE CAPITAL FUNDS/ INVESTORS

A1 Investments & Resources (ASx: AYI) 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.002

Acrux (ASx: ACR) 1.540 1.975 1.835 1.005 0.870 1.035 1.72 2.100 2.350 2.22 2.510 2.680

Arowana International Ltd (ASx: AWN) 0.985 0.980 0.915 0.902 0.900 0.890 0.785 0.600 0.450 0.48 0.540 0.480

Authorised Investment Fund (ASx: AIY) 0.025 0.028 0.028 0.025 0.020 0.026 0.026 0.029 0.029 0.026 0.026 0.033

biotech Capital (ASx: bTC) 0.051 0.051 0.026 0.025 0.020 0.023 0.025 0.021 0.018 0.025 0.025 0.024

billabong International (ASx: bbG) (Centrebridge Partners/ Oaktree Capital)

0.700 0.540 0.535 0.500 0.485

blue Sky Alternatives Access Fund (ASx: bAF)

0.960 0.980 0.990 0.990

blue Sky Alternative Investments (ASx: bLA)

2.890 2.870 2.91 2.950 2.500 2.340 2.400 2.090 2.190 1.610 1.930 1.450

bPH Energy Ltd (ASx: bPH) 0.011 0.010 0.009 0.008 0.009 0.008 0.010 0.012 0.011 0.013 0.013 0.013

burson Group (ASx: bAP) (quadrant Private Equity)

2.500 2.300 2.24 2.120 1.940

Calibre Global (ASx:CGH) (First Reserve) 0.370

Chandler Macleod (ASx: CMV) (Lazard Australia Private Equity)

0.385 0.415 0.330 0.330 0.335 0.415 0.415 0.410 0.415 0.425 0.505 0.475

ClearView Wealth (ASx: CVW) (Crescent Capital)

1.075 0.885 0.800 0.800 0.820 0.760 0.735 0.700 0.660 0.610 0.605 0.655

Cover-More Group (ASx: CVO) (Crescent Capital)

2.180 2.270 1.825 1.885 2.380

CVC Limited (ASx: CVC) 1.500 1.440 1.490 1.420 1.250 1.180 1.230 1.180 1.200 1.180 1.200 1.100

Dick Smith Holdings (ASx: DSH) (Anchorage Capital)

Exited 2.280 2.020 1.960 2.150

Disruptive Investment Group (ASx: DVI) 0.012 0.008 0.010 0.014 0.016 0.190 0.250

Energy Developments (ASx: ENE) (Pacific Equity Partners)

5.390 5.150 5.000 5.190 5.060 5.200 5.160 5.500

Grandbridge (ASx: GbA) 0.040 0.044 0.044 0.033 0.060 0.060 0.064 0.064 0.045 0.045 0.045 0.040

Greencross (ASx: GxL) (TPG) 9.800 10.000 10.400 9.240

Healthscope (ASx: HSO) (Carlyle Group/ TPG Capital)

2.440 2.240 2.260

Invigor Group (ASx: IVO) 0.730 0.090 0.100 0.035 0.040 0.040 0.053 0.020 0.040 0.020 0.020 0.025

iSentia Group (ASx: ISD) (quadrant Private Equity)

2.940

iSonea (ASx: ISN) (bioscience Managers/ Triton Inc)

0.085 0.175 0.210 0.235 0.180 0.180 0.210 0.280 0.320

Lion Selection Group (ASx: LSx) 0.310 0.395 0.350 0.300 0.400 0.455 0.050 0.510 0.530 0.525 0.530 0.550

Mantra Group (ASx: MTR) (CVC Asia-Pacific UbS)

2.340 2.060 1.960 1.800

Metro Performance Glass (ASx: MPP Nzx: MPG) (Crescent Capital)

1.700 1.590

Monash IVF Group (ASx: MVF) (Ironbridge Capital)

1.730 1.650 1.745 1.765

NSx Limited (ASx: NSx) 0.130 0.067 0.100 0.100 0.115 0.170 0.170 0.170 0.110 0.140 0.150 0.135 Continued ➤


ShARE ChART

Oceania Capital Partners (ASx: OCP) 1.450 1.440 1.500 1.370 1.450 1.460 1.500 1.500 1.600 1.600 1.590 1.600

Osprey Medical (ASx: OSP) (CM Capital/ brandon Capital/ Kinetic Investment Ptnrs)

0.580 0.570

Pioneer Credit (ASx: PNC) (banksia Capital)

1.790 1.600 1.560 1.580

qRx Pharma (ASx: qRx) (Uniseed) 0.023 0.029 0.750 0.080 0.095 0.094 0.770 0.860

q Technology Group (ASx: qTG) (Helmsman Capital)

0.020 0.022 0.031 0.028 0.021 0.015 0.020 0.017 0.020 0.021 0.018 0.020

Speedcast International (ASx: SDA) (TA Associates)

2.060 2.010

Spotless Group (ASx: SPO) (Pacific Equity Partners)

1.810 1.920 1.850 1.650 1.820

Techniche Limited (ASx: TCN) 0.085 0.890 0.088 0.770 0.064 0.650 0.070 0.094 0.070 0.670 0.069 0.081

Transpacific Industries (ASx: TPI) (Warburg Pincus, exited 2 Nov 2013)

exited exited exited exited exited exited exited exited exited exited exited 1.145

Veda Group (ASx: VED) (Pacific Equity Partners)

2.340 2.210 2.100 1.980 2.270

xero (ASx: xRO) (Valar Ventures/ Matrix Capital)

19.130 22.780 23.270 24.110 30.000 28.980 36.88 37.360 38.050 29.620 30.900 24.120

FUNDS OF FUNDS

IPE Limited (ASx: IPE) 0.345 0.395 0.445 0.495 0.480 0.460 0.465 0.440 0.440 0.435 0.440 0.460

australian private equity & venture capital journal // october 2014

Economy & Finance