AVCAL 2010 Award recipients announced

24 September 2010

The Australian Private Equity and Venture Capital Association (AVCAL) recognised members of their industry across a series of award categories at their annual conference held on 22 – 23 September at the Gold Coast.

A panel of industry experts assessed nominations across three award categories; the portfolio company awards, the excellence in investor reporting award and the AVCAL Chairman’s award.

The portfolio company awards recognised vision, achievement, creativity and entrepreneurship of AVCAL fund manager members through completed successful portfolio exits. Focus was placed on value-add by the fund manager, financial performance, returns to investors, innovation, industry competitiveness, and overall contribution to the economy.

The investor reporting award recognised fund managers for their excellence in reporting by assessing their adherence to the AVCAL guidelines and other core attributes such as clarity, and depth of information.

The AVCAL Chairman’s award recognised fund managers who delivered outstanding returns to their investors via a portfolio company exit, but who hadn’t won in another award category.

Best Early Stage

GBS Venture Partners for Peplin

Peplin is a biotechnology company which develops new treatments for skin conditions and skin cancers and is focussed on advancing and commercialising innovative medical dermatology products. GBS led a syndicate of US and Australian institutional investors to provide a total of AUD$36m, with GBS investing over AUD$11m, to support Phase 3 trials in Aktinic Keratosis or sunspots, a pre-cancerous condition with at least one lesion predicted to occur on 40-60% of Australian adults. An exit value of over USD$300m, representing an IRR of 127%, and 2.35x money was the highest ever achieved for a pre-market dermatology company and among the highest ever for any Australian biotech company when it was acquired by LEO Pharma, a leading global pharma company, headquartered in Denmark in 2009.

Best Expansion Stage

CHAMP Ventures for Mastermyne

Mastermyne is a leading underground coal mining contractor, supplying driveage and related services to major coal producers in the Bowen Basin, Illawarra and Hunter regions.

CHAMP Ventures became a minority shareholder in September 2005, working closely with the founders on a succession plan to strengthen the management team and systems. Revenue and profit increased threefold as Mastermyne achieved strong organic growth, selectively expanded its hire fleet and completed multiple acquisitions. A conservative approach was taken to gearing and profits reinvested for growth. CHAMP Ventures developed a strong, collaborative relationship with management and the founders.

In May 2010 Mastermyne listed on the ASX, generating a return of over four times CHAMP Ventures’ initial investment.

Best Management Buy-Out <$100m

Advent Private Capital for SCADAgroup Holdings

SCADAgroup, a Newcastle, NSW based company designs, manufactures and sells SCADA telemetry and process control products that allows critical infrastructure assets to be monitored and controlled over a wide area or in plant based situations. It also operates service provision businesses in Australia and the UK. Advent Private Capital partnered with management to affect the MBO in March 2006. This was a proprietary deal with total funding over the course of the investment of $17mil for a shareholding of 67%.

During the period of Advent’s investment, the business focussed on growth opportunities, making structural changes and enhancing its product division by investing in new distribution channels in North America and Europe and making strategic acquisitions of complementary product businesses in Australia, Canada and the US.

In April 2010, SCADAgroup was sold to Schneider, a French based electrical products conglomerate. The sale to Schneider represented 11 times forecast FY10 EBITA (circa $18.2mil). The enterprise value at entry was $37.2mil and at exit was $200mil.

Best management buy-out $100-500m

CHAMP Private Equity in partnership with Castle Harlan Inc. (CHI) for United Malt Holdings

UMH manufactures malt for the world’s largest brewers and distillers who use malt in the production of beer and whiskey. UMH operates in Australia, US, Canada and the UK. UMH was acquired from ConAgra Foods and Tiger Brands in September 2006 for approximately US$155m. At the time of acquisition UMH had EBITDA of US$27m. In November 2009 UMH was sold to the ASX listed GrainCorp for US$655m. At exit, UMH EBITDA had grown to US$116m, more than 300% higher than at the time of CHAMP and CHI’s acquisition. In US$ terms on the equity invested into UMH, CHAMP and CHI achieved a return in excess of 6x their money at an IRR of approximately 90%.

Best Management Buy-out >$500m

TPG Capital for Myer

In 2006, a consortium led by TPG Capital purchased the Myer retail business following the sale process by its then owner, Coles Myer. TPG was the only party to bid for both the operating business and the property, which was a key factor in TPG being selected as the preferred bidder.

During TPG’s ownership of the business, Myer underwent significant changes including 20+ new top tier executives being recruited to complement the existing management team, significant investment of over $400m over three years, driving the transformation of supply chain and IT, sale of the Melbourne property and subsequent recap of the business which delivered shareholders a solid return on initial investment after one year, significant improvement in financial performance, and plans for growth from 65-80 stores with a roll out of 15 new stores by 2014.

In 2009, TPG sold its shareholding in Myer at IPO.

Excellence in investor reporting

Keeping communications clear, and adhering to AVCAL standards is of ever growing importance. This year, two firms were awarded for their demonstration of excellence in investor reporting.

Crescent Capital

CHAMP Private Equity

AVCAL Chairman’s Award

The AVCAL Chairman’s award was presented to:

Jolimont Capital for NextWindow

Jolimont Capital Pty Ltd achieved a successful first exit for its Jolimont Secondaries Fund II through the trade sale of one of its major investments early this year.

Jolimont Secondaries Fund II sold its holding in NextWindow, a New-Zealand based developer of optical multi-touch technology and manufacturer of optical multi-touch screens, overlays and OEM touch components, to Smart Technologies, a provider of interactive whiteboards based in Calgary, on 30 March 2010. NextWindow’s touch components are used in computers and monitors sold by Dell, Sony, NEC, Lenovo and Medion. The exit was completed approximately 8 months after the initial investment was made by Jolimont Secondaries Fund II resulting in a cash-on-cash return of approximately 3.4x and an IRR of approximately 500% for the fund.