News Articles

Submission on Portfolio Holdings Disclosure by Superannuation Funds

15th May 13

Grant Thornton's Dealtracker 2013 report

7th May 13

Grant Thornton released a Dealtracker report which showed that Mergers and Acquisition (M&A) valuation multiples have declined in the last 18 months reflecting a cautious approach to investment in difficult market conditions. However, despite lower transaction multiples overall, high multiples are being paid for companies with strong growth prospects.

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View the Dealtracker report

Implications of AIFMD on GPs and LPs based outside Europe

26th Apr 13

This paper by the European Private Equity and Venture Capital Association (EVCA) provides an overview of the AIFMD’s impact on both non-European GPs and LPs.

NSW start-ups get $6.7 million innovation boost

5th Apr 13

By Oliver Milman

This article reports on the NSW governments launch of ‘Innovate NSW’, a $6.7 million scheme aimed at backing start-ups in areas such as e-health, energy technology and services, online and interactive education, advanced manufacturing, transport, infrastructure and logistics.

The article quotes Andrew Stoner, the state Deputy Premier and Minister for Trade and Investment, who says the initiative will provide local businesses with access to world-leading knowledge and capabilities and a low cost, low risk opportunity to trial and fine tune their solutions with major companies and government partners: “the NSW government, NSW companies and researchers are working together to lead the way in identifying barriers to innovative growth, to generate new solutions, improve productivity and create new opportunities for NSW and Australian enterprises to compete in global markets.”

Applications are now open for Innovate NSW which comprises of four different funding components.

McKeon Review final report released

5th Apr 13

The Minister for Health has today released the final report of the McKeon Strategic Review of Health and Medical Research. The report includes a recommendation for the creation of a $250m Translational Biotech Fund, which was strongly endorsed by AVCAL in its submission to the McKeon Review in Oct 2012.

Anchorage Capital Partners closes $250m fund

4th Apr 13

Sydney based private equity firm Anchorage Capital Partners today announced a A$250 million first and final closing of Anchorage Capital Partners II (the “Fund” or “Fund II”). The firm focuses on special situations and turnaround investment in the Australian, New Zealand and Southeast Asian markets. Significant interest from both existing and new investors meant that the Fund was oversubscribed and capped at A$250 million. Strong local market support was maintained with over 50% of Fund commitments sourced from Australian institutions.

Make private equity a partner to give your business its best footing

2nd Apr 13

Katherine Woodthorpe

Small businesses face many challenges, not least of which is having the finance to achieve their potential and realise their founders' vision.

The banks are not renowned for their enthusiasm for small, relatively high-risk businesses. The founders' capital (and ability to mortgage their home) has its limits, so where do they turn? Well, for many small businesses with strong growth potential, the answer may well be to turn to private equity funds.

PE fund managers in Australia regularly invest in high-growth-potential smaller businesses. Indeed, despite the media's obsession with the big brand name PE deals, in Australia more than half of PE investments are into small and medium enterprises valued at under $50 million. A subset of these are owners wanting to expand their companies without giving up all their equity. PE investment can allow businesses to expand more rapidly than their working capital would otherwise allow and to take advantages of opportunities such as acquisitions to enable growth.

Growth or "expansion" PE funds make up more than 60 per cent of the local PE industry and represent a valuable source of capital for SMEs looking to further expand. As well as enabling this growth, PE managers bring many other benefits to the partnership with entrepreneurs. In this growth segment, the founders usually retain a substantial and sometimes majority shareholding. The PE investors bring expertise, networks and transaction experience to strengthen the company. They are there to help grow the company. If agreed progress is made, then additional tranches of finance to enable the ongoing growth will be made available. And with a sizeable portfolio of investee companies, when additional finance is needed, they have the clout to negotiate better deals with the banks. PE managers make money for their investors (generally super funds and other pension funds) by increasing the underlying value in their investments. Again, contrary to the myths about PE, you don't make money by slashing and burning an investee company. You make it by increasing the underlying value so that an acquirer will see real value in the company. During the three years to June 2011, even in the immediate aftermath of the global financial crisis, PE exits as a whole generated $5.7 billion in proceeds for their investors from the original $3.7bn invested. In the same period, the S&P/ASX 300 Accumulation Index showed an annualised return of just 0.26 per cent. The areas in which the PE fund is involved in assisting management fall into three broad categories: strategic thinking, financial aspects and operational management. They bring an experienced board of directors who can help with setting, critiquing and monitoring strategy as well as the relationships needed to achieve the company's goals. They bring financial expertise, structure and capital. And they bring operational expertise, access to additional executives, public company standards of reporting and good governance practices to give a company the best foundation to execute its strategy.

One of the most powerful roles the fund manager fills, from what chief executives in PE portfolio have said, is a sounding board for someone whose interests are aligned with management's but who isn't working in the business directly. Many CEOs relate stories of speaking at least weekly or more often with their PE colleagues to sound them out about ideas and generally feel less alone at the helm. So PE investment can be a boon to rapidly growing SMEs to help the founders realise their vision.

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Australia's venture capital scene ready to bloom: Ernst & Young

27th Mar 13

Harrison Polites

Ernst & Young’s US technology sector leader Jeffrey Liu has said Australia’s venture capital scene is on the cusp of a boom.

Mr Liu said the problem of Australian entrepreneurs moving overseas due to better investment opportunities may solve itself as many Australian entrepreneurs in the US are currently looking at ways to bring their innovations back home.

$200 million funding to boost Aussie start-ups

27th Mar 13

At least $200 million will be invested into early stage, high growth Australian companies by three new venture capital funds supported by the Gillard Government’s Innovation Investment Fund (IIF).

The Minister for Climate Change, Industry and Innovation, Greg Combet, today announced three new funds selected under the latest tranche of the IIF, a key Government vehicle for providing small and medium sized enterprises with access to venture capital. He said $100 million of Government funding would be matched dollar for dollar by private sector investors in Carnegie Venture Capital Pty Ltd ($40 million), and GBS Venture Partners Pty Ltd and Innovation Capital Associates Pty Ltd ($30 million each). This is a huge boost for Australian start-ups, Mr Combet said. These funds will invest at least $200 million of new capital in start-up businesses.

Blue Sky backing for burrito chain

21st Mar 13

Gillian Tan

Blue Sky Private Equity has invested more than $3 million in Australia-based Mexican restaurant chain Beach Burrito Company to help the company expand to up to 20-30 company owned restaurants in the next three to five years. Blue Sky Private Equity, which seeks to invest in rapidly expanding Australian companies, commended Beach Burrito's Managing Director Blake Read for building a profitable business in a time when many restaurants were closing down.

How to nurture our entrepreneurs

18th Mar 13

Tony Boyd discusses the launch of new venture capital fund, Blackbird Ventures, and evidence that in recent years, backing the technology and biotech entrepreneurs has delivered gains as large as those from the resources sector.

The article also looks at the experience of Melbourne-based Starfish Ventures which shows that location is no barrier to international success in the digital space, citing examples from the Starfish Ventures portfolio such as Tmail and ICIX.

The article notes it has been pleasing to see the Australian government provide strong support to the venture capital sector’s three umbrella programs, the Innovation Investment Fund, Commercialisation Australia and the R&D tax incentives. It is possible these will combine to help nurture the next digital entrepreneur in an age when technology is the country’s biggest export, rather than coal and iron ore.

Australian private equity-backed firms bigger employers than banks

11th Mar 13

By Gillian Tan

Australian banks may have a combined market value that dwarfs Germany’s financial system, but an unsuspecting cohort trumps them as one of the nation’s largest employers.

Australian private equity-backed companies, such as Hoyts Entertainment Group and The Healthscope Group, together employ around 262,000 staff, according to a Deloitte Access Economics report.

That’s a larger employment figure than Australia’s banking or automotive sectors, which respectively employed an average of 196,000 and 260,000 over the fiscal 2007-to-2011 period, according to the report commissioned by the Australian Private Equity and Venture Capital Association Ltd, or AVCAL.

Private equity investment in Australia supports half a million jobs

8th Mar 13

Benefits of private capital under-estimated: Mercer

7th Mar 13

Superannuation funds should make a meaningful allocation to private capital to reap the rewards of a sophisticated private capital strategy, according to Mercer partner Ray King.

King said that institutional investors had allocated quite a bit of money to private capital up until 2008, when the trend changed and allocations shrank.

But opportunities abounded in market inefficiencies between private capital's sub-asset classes, he said.
Mercer recommended a private capital allocation of 25 per cent concentrated in four sub-asset classes, King said.

Brandon Capital, Yuuwa Capital lead funding round for PolyActiva

21st Feb 13

Early stage company PolyActiva has received A$9.2m in funding thanks to a Series B fundraising round led by a consortium of investors including Brandon Capital and Yuuwa Capital. The Australian biotech firm said the funds will help further the preclinical and clinical development programs of its products under development. Funding came from angel investors, Yuuwa and Brandon's Medical Research Commercialisation Fund and Brandon Biosciences Fund 1.

Business Today discusses venture capital with AVCAL CEO

18th Feb 13

Business Today host Whitney Fitzsimmons spoke with AVCAL CEO Katherine Woodthorpe about venture capital and how it can boost the Australian economy.

Watch the interview

Board of Taxation report into VCLPs released

18th Feb 13

Assistant Treasurer David Bradbury has released the Board of Taxation's Review of taxation arrangements under the venture capital limited partnerships regime.

The Government agrees with all of the Board of Taxation's recommendations of these reviews in full or in principle. Changes requiring legislative amendments will take effect on Royal Assent.

Board of Taxation’s Review of taxation arrangements under the VCLP regime

Read the Government’s response

AVCAL welcomes Government's Venture Australia initiative

18th Feb 13

AVCAL welcomes the Government's Innovation Statement announced on 17 February 2013 and its focus on developing the jobs of the future for Australia.

We are particularly pleased to see the recognition of the importance of the Venture Capital industry to enable Australia’s innovations turn into products, processes and services that add to the economy and provide jobs in the future.

Australian PE continues to post steady returns in Q3 2012

7th Feb 13

Valmont Industries to acquire Locker Group from Advent Capital - WSJ

7th Feb 13

By Gillian Tan

Mid-market PE firm Advent Private Capital has announced the sale of Locker Group Holdings to US-based Valmont Industries. Exit from the construction and architectual product manufacturer is expected to generate a return of over 2.5 times for Advent's investors. Since Advent purchased Locker Group in 2006, it completed a number of manufacturing, warehousing, procurement and IT operations improvements to successfully grow the business.

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