AVCAL Annual Award Winners

Best Early Stage

The Early Stage Investment category applies to start up and early stage investing
in companies with revenues of less than $5M per annum at the time of
investment.

The Best Early Stage Investment for 2008 is

GBS Venture and CM Capital for Pharmaxis

GBS first invested in Pharmaxis as a start-up in 1999 prior to in-licensing what
has become its core technology and building the management team. In the
following 8 years GBS led a syndicate of follow-on venture investors through a
number of private financing rounds prior to listing on the ASX in 2003. Since
raising $25m at IPO in Q4 2003 Pharmaxis has gone from strength to strength,
raising a further $150m on the ASX and NASDAQ. While Australia is a well
recognised source of world leading innovation resulting from our strong basic
research ability, we have traditionally had a poor history of commercialisation of
such innovation. As a significant counter to this trend, Pharmaxis has not only
managed to develop two products through international clinical trials, it has done
so while retaining global rights to its products. With a combination of strong
management, execution and capital raising activities, Pharmaxis is now in a
position to achieve significant global sales of its products. In the 8 years since
initial investment Pharmaxis has progressed from a start-up to a fully integrated
Australian pharmaceutical business.

The investment made a return of 17.3x money and 61% IRR

Best Expansion Stage

The Expansion Stage Investment category applies to un-leveraged equity
investment in companies with revenues in excess of $5m p.a. at the time of
investment.

The Best Expansion Stage Investment for 2008 is

RMB for EIW

EIW Holdings is a distributor of electrical components and accessories to the
building, mining and industrial sectors with 16 sales branches. The company’s
current turnover is approximately $140 m. RMB acquired 38% of the company’s
equity in September 2004. In October 2005, an additional $1.5m was invested to
fund the acquisition of Lear and Smith.

Revenue grew from approximately $48m in FY 03 to a run rate of approx $170m
at the time of RMB’s exit.

The company had 100 employees at the time of investment which had grown to
approximately 200 staff at the time of exit.

In October 2007, almost exactly three years after RMB became a shareholder in
EIW Holdings, the business was sold to the world’s largest electrical distribution
group, the French company Rexel.

The transactions generated a cash out multiple of 6.2 times, with an IRR of 85%.
Management Buyout less than $100M

Best Management Buyout <$100m*

The Best Management Buyout with a value less than $100M for 2008 is

CHAMP - Amdel

Amdel Limited (Amdel) is one of the largest analytical testing businesses in
Australia and New Zealand, with a primary focus and leading 26% market share
in the high growth minerals testing market. The company also offers testing
services across a range of other markets including food, environmental,
pharmaceutical, materials and petroleum.

Amdel was established in 1960 by the Commonwealth and South Australian
governments and private industry, and was privatised in 1987. CHAMP Ventures
sponsored a management buy-out of Amdel in December 2005. In May 2008
Amdel was acquired by Bureau Veritas, a global testing, inspection and
certification company, following a competitive dual-track sale process. Key
ingredients for CHAMP’s successful investment in AMDEL were: Investment for
growth and strategic acquisitions - Amdel grew its employees from approximately
525 at MBO to over 1,200 at exit and invested more than $15 million of capital
expenditure, compared to $2 million per annum in the years prior to the MBO.
Three Strategic acquisitions targetted growth markets and consolidated their
leadership position

The investment returned 10.5 times the $22.0m investment with an IRR of
169.2%.

Best Management Buyout $100m-$500m*

Management Buyout greater than $100M but less than $500M
The Best Management Buyout with a value greater than $100M but less than
$500M for 2008 is

Ironbridge for Qualcare Group Holdings

Ironbridge identified the aged care market in NZ as an attractive investment
sector in mid 2004.Major attractions included strong growth backed by
demographic trends and a fragmented market ripe for consolidation. In particular
they were looking for an asset that had quality care sites and an associated land
bank.

Ironbridge identified Qualcare as the sole sizeable elderly care asset remaining
under private ownership in New Zealand. Following a direct approach to the
majority owner, and a long period of negotiation, Ironbridge completed the
investment in December 2005.

The company then set about further acquisition, purchasing 7 additional aged
care facilities from and blocks of land surrounding the existing Qualcare facilities.
At the outset of the investment, Ironbridge identified several goals that would
need to be achieved for a successful exit. By mid 2007 these goals had largely
been achieved and they initiated the sale process that resulted in the pre emptive
offer from Retirement Care NZ. The transaction settled on February 2008.

The investment returned 4.2x with 92.5% IRR

Lifetime Contribution Award

The program tonight has a special feature that we haven’t talked about. Since
our Awards celebrate excellence in performance for our industry, we feel that it
only fit that on an annual basis we acknowledge those people who have
contributed in a great way to some of the fine performance you’ve seen tonight
and indeed by setting the original standards that we’ve come to appreciate and
value.

It is my great pleasure to invite, Mr. Julian Knights, Managing Parnter from
Ironbridge Capital to the stage, to present our inaugural Lifetime Contribution
award.

Best Early Stage Investment

Allen & Buckeridge

The winner of the Best Early Stage Investment was Allen & Buckeridge for their investment in Hitwise.

Hitwise is a leading online competitive intelligence service that helps marketers improve their online performance. Hitwise was founded in February 1997 with the aim of allowing websites with limited reach (i.e. most corporate sites) the same types of information available to large sites such as MSN and Yahoo!

Using its patented methodology and relationships with ISPs around the world, Hitwise captures the anonymous online usage, search and conversion behavior of 25 million Internet users.

Allen & Buckeridge invested in 2000 and was heavily involved in strategic discussions and led the transition to a full, professional management team.

Allen & Buckeridge also moved the company's head office to New York to drive US penetration and put the company on the radar screen of global players such as Experian, the ultimate purchaser of the company.

The investment returned 12 times money and delivered an IRR over 7 years of 47.8 percent.

Best Expansion Stage Investment

CHAMP Ventures 

The winner of the Best Expansion Stage Investment was CHAMP Ventures for their investment in Australian Temporary Fencing.

Australian Temporary Fencing is the market leader in the hire of temporary fencing and height safety devices, operating in 27 locations across Australia .

CHAMP Ventures invested $6.5 million, $5.0 million went into the business to provide expansion capital and $1.5 million was used to buy shares from existing shareholders.

During CHAMP Ventures' active involvement the company significantly increased revenue and earnings by successfully executing a number of strategies involving growth, operational improvement and capital efficiency. These included:

•  expanding the pool of fencing panels by 57 percent to a total length of over 1,000 kilometres;
•  acquiring a complementary business;
•  developing the management team and improving the budgeting process; and
•  consolidating manufacturing into one location;

The investment returned 3.9 times money and delivered an IRR over two and a quarter years of 105 percent.

Best Management Buyout < $100M

Crescent Capital Partners 

The winner of the Best Management Buyout under $100 million was Crescent Capital Partners for their investment in Valley Longwall.

The Valley Longwall Group provides specialized underground coal mining equipment and allied services which allow for the safe and efficient extraction of gaseous underground coal. In addition to its Australian operation, the company has developed a rapidly growing business in China and has emerging opportunities in Eastern Europe and India.

The company was created through an aggregation strategy involving an initial buyout followed by six add-on transactions.

Crescent Capital played a principal role in creating the aggregation and growth strategy and were instrumental in the sourcing, selection and execution of add-on transactions.

On the operational front, Crescent Capital identified and recruited additional members of the management team and transformed the reporting and finance function.

During the period of private equity involvement, the number of employees grew from 150 to 520.

The investment returned 7.8 times money and delivered an IRR over two years of 300 percent. 

Management Buyout greater than $100M but less than $500M

Archer Capital and Pacific Equity Partners 

The winner of the Best Management Buyout between $100 and $500 million is Archer Capital and Pacific Equity Partners for their investment in Emeco Holdings.

Emeco is the market leader in rentals of heavy earth moving equipment. It has operated in Australia for over 30 years.

In addition to the $112.5 million spent acquiring 75 percent of the business, Archer and PEP invested $50 million to grow the stock of equipment available for rental. This allowed the business to take advantage of opportunities in the Australian market.

PEP and Archer worked to ensure that systems were in place to optimize equipment utilization, depreciation and resources in the business. They also provided access to resources to assist with all of the bank financing and acquisition process when additional businesses were purchased in Canada and Australia.

The investment returned 3.8 times money and delivered an IRR over one and a half years of 139 percent.

Best Early Stage Investment

Pacific Equity Partners

www.pep.com.au

The winner of the Best Early Stage Investment was Pacific Equity Partners (“PEP”) for their investment in Oasis Asset Management (“Oasis”)

Oasis provides specialist asset administration, trustee and internet services to the funds management and financial planning industry.

The business was established in 1999 by four entrepreneurial senior executives from the master trust administration industry who had identified a gap in the market for a new generation administration platform. It has its operations in Wollongong and 90% of its total staff of 170, including all operational and IT employees, are based there.

PEP provided funding in three tranches over two years starting in September 2000. The funding was used mainly for IT development and development of business processes and also for business development.

PEP was heavily involved in the development of the business's strategic plan and in augmenting and mentoring the management team.

Since its inception Oasis has achieved strong growth in funds under administration (or advice) (“FUA”) and now manages more than $3.6 billion in FUA for nine clients in individually branded investment products. More than 850 investment advisers and 50,000 investors use the Oasis platform to transact with Oasis's clients.

PEP orchestrated a highly successful exit in 2006 via a competitive sale process for a controlling stake which delivered full liquidity to PEP and partial liquidity for management while locating a long-term strategic partner for the business in the purchaser, ING Australia.

Best Expansion Stage Investment

Investec Wentworth Private Equity

http://www.iwpe.com.au

The winner of the Best Expansion Stage Investment was Investec Wentworth Private Equity for their investment in Fone Zone which operates a network of mobile phone retail stores and business sales teams.

In February 2003 Investec Wentworth Private Equity invested $7.95M and appointed two directors to the Fone Zone board.

During the period of private equity involvement the business:

• grew from 52 to 155 retail outlets
• employed an additional 550 people, many of them in regional areas
• increased annual revenue from $56M to $181M
• increased net profit after tax from $1.1M to $12M

Investec Wentworth Private Equity provided particular assistance with:

• the development and implementation of acquisition and growth strategies.
• the development of the board and governance and reporting structures
• negotiation of a new 5 year agreement with Telstra
• development and implementation of the IPO plan/exit strategy.

Best Public-to-Private Transaction

ABN AMRO Capital

www.abnamrocapital.com.au

The winner of the Best Public-to-Private Transaction was ABN AMRO Capital for their investment in Ausdoc

In making a bid for the Group's shares, ABN AMRO Capital presented a compelling cash proposition to shareholders whilst taking on all the risk and not extracting warranties from the selling shareholders.

ABN rationalized the group structure by:

• shutting down the failed mail business
• selling the Australian courier business
• separating the Ausdoc and Freightways subsidiaries so that they were financed and operated as stand-alone investments.

During the period of ownership ABN also supported the growth of both businesses through investment in equipment and facilities and remuneration incentives.

Freightways was listed on the New Zealand Stock Exchange one year later for NZ$365 which returned more than the original equity investment in the combined transaction. Ausdoc was sold to a major competitor for $A260 in December 2005.

Best Management Buy-Out < $50million

Deutsche Bank - DB Capital Partners

www.dbcapitalpartners.australia.db.com

The winner of the Best Management Buy-Out <$50million was Deutsche Bank – DB Capital Partners for their investment in Pacific Nursing Solutions.

Pacific Nursing Solutions was established in 2004 as a holding company to undertake a roll-up of the nursing agency sector in Australia , a sector that DB Capital Partners had identified as being highly fragmented and having attractive demand/supply dynamics.

DB Capital Partners, with the assistance of an advisor (boutique advisory firm, Orion Ventures), spent 12 months reviewing the sector and identifying potential targets before establishing Pacific Nursing Solutions. The strategy behind the roll-up was to acquire businesses in general nursing, a range of medical specialties, aged care and home care across Australia with the aim of creating the national market leader in the sector.

In April 2004, Pacific Nursing Solutions made its first acquisition, Adelaide-based Nursing Agency Australia (NAA) which at the time was Australia 's second largest nursing agency. During the following 17 months the company acquired ten additional businesses including three in the same month. Most of these acquisitions were identified during the initial assessment phase.

The business was sold in December 2005 by which time it had grown to become Australia 's largest nursing agency and one of the country's leading private home care businesses.

Best Management Buy-Out $50million to $250million

Archer Capital

www.archercapital.com.au

The winner of the Best Management Buy-Out $50million to $250million was Archer Capital for their investment in John West Foods

In early 2003 Unilever decided to sell John West Foods, its Australasian canned fish business, as part of a strategy of focusing only on global brands. The transaction was structured as an asset deal with only inventory and the John West, Seakist and Ally brands in Australasia and Asia being offered for sale.

In July 2003, Archer and Simplot acquired John West Foods in a 50/50 joint venture. Such a strategic partnership between a corporate buyer and a buyout firm, while common in the US and UK , was unusual in Australia .

The original investment thesis was:

• John West Foods competed in a large and fast-growing category
• The business occupied the leading position in the category
• The price was attractive being less than 7x EBIT compared to more than 12x in comparable transactions
• There was an opportunity to improve the fundamental performance of the business.

There were three key elements to the deal:

• a management agreement under which Simplot was contracted to run the business
• a pre-agreed exit mechanism comprising a put/call option arrangement under which Simplot would move to full ownership at the end of year three.
• establishment of a management committee which Archer co-chaired

The management committee's role was far more operationally focused than a traditional board of management and through it Archer played a key role in the day-to-day operational management of the business.

The first six months of ownership saw a bitterly competitive market environment. A substantial revaluation of the Australian dollar led to price promotions by competitors and caused new competitors to enter the market. However the operational initiatives implemented by the new owners allowed the business to survive and then flourish and reach historic highs in profitability.

Best Management Buy-Out over $250million

CHAMP Private Equity

www.champmbo.com

The winner of the Best Management Buy-Out over $250million was CHAMP Private Equity for their investment in Austar United Communications

Austar is one of Australia 's leading subscription television providers, offering primarily digital satellite services to customers in regional and rural areas. It floated in 1997 at $4.00 per share and reached a peak of $9.50. However by September 2002 the company had severely underperformed and the stock market had placed the stock in the ‘penny dreadful' bin where it was trading at just 15 cents.

Despite all this CHAMP formed the view that by addressing three fundamental issues Austar's performance could be vastly improved. These three factors were:

• the company needed to be re-capitalised
• the management culture needed greater discipline with a focus on core Pay TV metrics, particularly on improving new sales & churn.
• the restructuring of the industry - expected when Optus Vision exited - which would improve Austar's strategic positioning.

As well, CHAMP decided that the existing management who had been pretty much written off by the market were up to the challenge and should be supported to drive the turnaround.

Once CHAMP had acquired the business they implemented classic private equity disciplines including:

• improved individual accountability, KPIs and fact-based reporting
• Weekly board reporting on sales, churn, cash and call centre activity
• Rigorous monthly reporting and meetings on financial performance, key projects, cash and EBITDA forecasts.

Best Early Stage investment

The judges this year decided that there would be joint Early Stage winners. The winners are Uniseed and Allen & Buckeridge for their investment in Wedgetail Communications, and a consortium of managers for their investment in Seek – CHAMP Ventures/AMWIN IIF, Macquarie Technology Fund, and Gresham AMCF.

Seek
Seek was nominated by CHAMP Ventures, who invested through the AMWIN IIF Fund. Other investors included the Macquarie Technology Fund and Gresham AMCF. These investors were there on day one – back in 1999, well before any of its big name investors. They provided extensive strategic input to the company, including active participation in market analysis, fund raising and exit planning, as well as assistance in budgeting, cost control and project selection.

Wedgetail Communications
Wedgetail Communications is a provider of identity management and user authentication systems for Unix, Linux, and Java environments leveraging Microsoft infrastructure. It was spun out of the QLD-based DSTC Cooperative Research Center. Uniseed Capital and Allen & Buckeridge executed the spin out process from the university and provided significant operational guidance to the management team. They also helped the company negotiate a commercial and investment agreement with Microsoft. The business was sold in a US trade sale in July this year.

Best Expansion Stage

NBC Capital
www.NBCcapital.com.au

The winner of the Best Expansion Stage transaction is NBC Capital for their investment in Trinity Funds Management. As we know, much of the financial services innovation in Australia has been driven by the venture capital and private equity sector. NBC concentrated on improving the internal business processes of Trinity Funds Management and helped promote the business to asset consultants and superannuation fund investors. Finally they drove a very successful IPO process. FUM grew to $270 million immediately after the IPO.

Best MBI

DB Capital Partners
www.dbcapitalpartners.australia.db.com

The winner of the best MBI is DB Capital Partners for their investment in Loscam, a pallet and returnable packaging business. It is the market leader in pallet hire in SE Asia and has 20% market share in Australia . DB Capital Partners acquired the business in a very competitive auction, having agreed before close, a very detailed strategic and operational plan with the management being brought in. The business was successfully re-branded within one month of purchase. It has exceeded budget each month since the acquisition and hit its 5 year target EBITDA in the second year of the MBI. A major driver of success has been significant organic growth in Asia . DB Capital sourced the incoming CEO through its Melbourne network and led the dual-track exit strategy which involved the prior negotiation of a stapled debt package to set a benchmark value and reference point for potential buyers.

Best MBO < $50m

Dexion
www.dexion.com.au

The winner of the best MBO < $50 million is CHAMP Ventures for their investment in Dexion.

Dexion is a leading supplier of storage and materials handling solutions in the Asia-Pacific region and some Middle East markets. During the period of the MBO, the company achieved significant revenue and earnings growth by successfully executing a number of growth strategies, re-investment in the Dexion brand, and launch of a new shelving product and restructuring.

Best MBO > $50m

The winners of the best MBO > $50m are Ironbridge Capital and CVC Asia Pacific for their investment in Affinity Health. They demonstrated great finesse during the bidding process, had an innovative approach to issues such as long-tail medical malpractice liabilities and some off-shore hospitals and their detailed and thorough due diligence enabled them to attribute full value to an operational turnaround that was already under way. The result was a bid that provided the vendor with a compelling full deal solution. Having secured the business they reversed a strategy of centralisation of control and concentrated on improving relationships with doctors. They introduced internal peer groups for benchmarking and forced a much greater focus on operational KPIs.

Best Principal investment

JT Campbell & Co
www.jtcampbell.com.au

The winner of the best Principal Investment is JT Campbell & Co for their investment in Child Care Centres Australia. JT Campbell & Co. recognised and moved quickly to capitalise on a short-lived arbitrage opportunity between the valuation of public and private assets in the child care sector. In 4 months they consolidated 30 'long day care' facilities and floated the group as Child Care Centres Australia. This process involved innovative use of long-dated call options to maximise leverage, rapid and uncompromising diagnosis of problems, dynamic evolution of management and designing the business from the start with the exit in mind.

Best Early Stage

The winner of the Best Early Stage category was CVC REEF Limited for their investment in Geodynamics Limited.

• REEF stands for Renewable Energy Equity Fund.
• Geodynamics is a specialist in the generation of electricity using heat from deep under the ground, rather than burning coal, to drive turbine generators.
• CVC REEF participated in each funding round until reaching the REEF-imposed limited of $3M.
• From the outset CVC REEF was heavily involved in their investment at Board level.

Best expansion stage

• In November 1999 Quadrant invested $9.1M for 20% of Pumpkin Patch, the largest supplier of exclusively branded children’s wear in Australia and New Zealand .
• This investment en ab led an accelerated store rollout in Australia .
• Pumpkin Patch IPO-ed in June 2004 delivering an IRR (“internal rate of return”) of 40%.

Best Management Buy-out < $50m

• Claypave is a specialist clay paver manufacturer in Queensland.
• By investing $5.6M in December 1997 to acquire 49.9% of the business Quadrant supported the vision of the founding shareholders who wanted to stage an MBO and defeat a bid from a trade buyer.
• During the period of the investment exports increased from 5% to 50% of sales. An IRR of 58% was achieved.

Best Management Buy-out > $50m

The winners of the Best MBO greater than $50M category were CVC Asia Pacific and Catalyst Investment Managers for their investment in Pacific Brands.

• Pacific Brands is a leading manager of well-recognised consumer brands including Chesty Bond.
• In November 2001 CVC and Catalyst led a consortium of investors to buy the business from Pacific Dunlop where it was an unloved subsidiary.
• At the time the deal was the second largest Australian LBO ever (it is still the third largest).
• Considerable improvement was made to the business by initiatives such as an increased ad spend, a 163% increase in staff training expenditure and a strong focus on working capital.
• The business IPO-ed in April 2004.
• The winners achieved an IRR of 141% and received back 5.1 times their invested capital.

Best Management Buy-in

The winner of the Best MBI was Macquarie Direct Investment for their investment in JB Hi-Fi Limited.

• In July 2000 Macquarie Direct Investment acquired JB Hi-Fi for A$42M, with A$14M of equity, A$25M of senior debt and A$3M of mezzanine debt.
• In yet another example of how a venture capital fund can provide far more than cash, Macquarie contributed strongly to the investment’s success through deep involvement in securing the management team, developing the expansion strategy and leading the IPO in October 2003 at an enterprise value of A$175M and a market capitalisation of A$148M.
• The internal rate of return on the investment was 88% and 6.5 times invested capital

Best Public-to-Private

The winner of the Best Public-to-Private category was Catalyst Investment Managers for their investment in Just Jeans Group.

• In November 2001 Catalyst purchased Just Jeans Group for an enterprise value of A$128M.
• Despite strong brand names and a long track record of profit ab ility Just Jeans was unloved by the ASX market and the 60% owner (the Kimberley family) was looking to sell.
• The success of the investment was driven by a number of factors including the acquisition of two new retail chains, the sale of a loss-making chain and significant investment in information technology and distribution.
• The IPO of the business for an enterprise value of A$573M in May 2004 delivered an IRR of 157%.

Best Early Stage

Best expansion stage

Best Management Buy-out > $20m

• Buying well and exit timing
• Strong focus on working capital pushed by the VC's
• Making long overdue CAPEX
• The impact of making some key hires - head up US operations & also a senior finance hire

Best Management Buy-out < $20m

Best Management Buy-in

Best Management Buy-Out

Best Early Stage Exit

Best Expansion Stage Deal

Best Early Stage

Best Expansion Stage

Best Management Buy Out

Best Management Buy In

Best Early Stage

Best Expansion Stage

Best Management Buy Out

Best Management Buy In

Best Early Stage

Best Expansion Stage

Best Management Buy Out

Chairman's Award

Best Early Stage

Best Expansion Stage

Founding Director of Austal, John Rothwell, was named Australian Entrepreneur of the Year for 2002.

Best Management Buy Out

Best Expansion Stage