AVCAL 2011 award winners announced

22 September 2011

The Australian Private Equity and Venture Capital Association (AVCAL) has today announced the winners of a series of awards that recognise outstanding performance in the private equity industry.

AVCAL CEO Dr Katherine Woodthorpe said a panel of industry experts assessed nominations across the award categories and found many examples of innovation, growth, and excellent returns on investment, the beneficiaries of which generally are local and overseas superannuation and pension fund members.

“It’s important to take stock as an industry and to recognise and reward performance,” Dr Woodthorpe said. “Despite volatility in global markets in recent times, Australian private equity firms have worked hard to obtain stable and high-performing returns, relative to public benchmarks such as the ASX/S&P 300.

“The winners of our 2011 awards are wonderful examples of the purpose and aim of private equity: to steward companies so that they grow and create value and long-term sustainability through aligning the interests of owners and management. This ultimately delivers improved productivity, creates jobs and contributes to the national economy.”

With respect to investor reporting standards, Dr Woodthorpe said the quality of nominations for this award category continues to improve every year, with the 2011 winners raising the bar even further.

Portfolio Company Awards

The portfolio company awards recognise vision, achievement, creativity and entrepreneurship of AVCAL fund manager members, who are collectively responsible for managing over $25 billion of capital. The categories for these awards are for investments in early stage, expansion stage, small buy-out, medium buy-out and large buy-out. The judging focus was on value-add by the fund manager, financial performance, returns to investors, innovation, industry competitiveness, and overall contribution to the economy. The winners of this year’s awards demonstrated an average IRR of 70% and an average money multiple of 4.4.

Best Early Stage

Advent Private Capital for their investment in Securepay

SecurePay is a leading Australian independent payment gateway and electronic commerce business providing B2B and B2C electronic payment and associated systems for banks, utilities, government agencies, large corporates and SMEs. SecurePay employed 15 staff in 2000, expanding this to 60 staff in 2010, servicing over 19,000 merchants. SecurePay now processes in excess of 50 million electronic transactions per annum.

Advent provided expansion capital funding in March 2000, which enabled Securepay to commercialise its payments technology. Advent also assisted with further acquisitions of organisations and technology platforms that complemented the core range of services and to consolidate its position as a market leader in the Australian payments services sector. Securepay was sold to Australia Post in December 2012 for an undisclosed sum generating a return of 6.2 times on investment for an IRR of 20.4%.

Advent Managing Director Rupert Harrington said: “Our extensive experience of growing companies over the long term has enabled Securepay to undertake a period of significant growth. We would like to thank the Securepay management team for their partnership and wish the company continued success. This growth-focused investment strategy is consistent with our approach across our portfolio and is a great outcome for our investors.”

Best Expansion Stage

Anacacia Capital for their investment in Lomb Scientific

Lomb Scientific is a major supplier of laboratory consumables, chemicals and instrumentation to the scientific community. Its core manufacturing facility for chemicals is based in Western Sydney and the main distribution centre is based in Southern Sydney. There are sales offices throughout Australia and New Zealand.

Anacacia bought into Lomb in April 2008 (just prior to the GFC) alongside management and the family of the recently deceased founder. Anacacia and Lomb agreed a strategy to advance the support of science. With Anacacia's assistance and under a new CEO, management successfully improved the business, growing revenue and earnings and subsequently built a strong platform to maximise its attractiveness to an international trade buyer. Anacacia’s efforts also included strengthening the balance sheet, adding governance and other systems, better alignment of costs to revenues, processes to integrate prior acquisitions and a continued push to Lomb-owned brands. Earnings (EBITDA) grew by ~35% per annum and net debt (used for acquisitions) reduced considerably during the time of Anacacia's investment. When it sold the company in December 2010, Anacacia made 4.3x its money for an internal rate of return of 79% per annum for its investors.

Anacacia Capital Managing Director Jeremy Samuel, who led Anacacia's investment and was a director of Lomb Scientific, said: “We built an outstanding team at Lomb Scientific with a very clear strategy and it was terrific to see management as well as our investors rewarded for all their hard work.”

Best Management Buyout <$100m

CHAMP Ventures for their investment in TSmarine

TSmarine is an innovative offshore oil and gas contractor providing services to oil operators and larger contractors across the life of oil and gas fields. Its services include subsea well intervention, abandonment, construction, inspection repair and maintenance, seabed based deep-water drilling and coring, project management and engineering. The business deploys these services from a fleet of high specification dynamical positioning vessels. TSmarine’s parent company needed to sell assets and in November 2009 CHAMP Ventures invested A$38m in a buyout of the Asia Pacific business with the local management team.

CHAMP Ventures adopted a hands-on approach starting with the 100 day plan, established FX policies and more robust forecasting, strengthening team weaknesses, and drove refinement and execution of the strategic plan in a challenging market. The plan focused on creating a strong backlog of long-term contracted work while still being active in the “spot” market to drive profits and continue to expand the customer base. In March 2011 the business was sold to Fugro N.V., a listed Dutch survey company for US$107.5m.

CHAMP Ventures Managing Director Su-Ming Wong said: “Our support enabled TSmarine to expand rapidly and secure long term work from a diverse customer base, ultimately positioning the business as a ‘must have’ asset and generating solid returns to all investors in a relatively short timeframe.”

Best management buyout $100m-500m

Pacific Equity Partners (PEP) for their investment in Tegal Foods

Tegel, the leading producer of poultry products, was sold to Affinity Equity Partners Funds in May 2011, generating an overall return to PEP Fund investors of 3.9x their money and 101% IRR . Over the 5 year hold period, having acquired the business from leading international food company Heinz, PEP worked closely with management to drive a significant improvement of the facilities and customer relationships, broadening the product set and opening up attractive export lines. The business was transformed from a leading domestic producer to an important regional player.

PEP Managing Director Anthony Kerwick said: “We are delighted with the outcome of this investment for the PEP Fund investors, Tegel management and employees. This was in many ways a classic PEP Fund investment … where we were able to work with management to take a good company and turn it into a great one. The new owners will bring another dimension of opportunity to Tegel and we’re confident that it will continue to thrive under their ownership.”

Best management buyout $100m-500m

CHAMP Private Equity for their investment in Study Group

Study Group is a leading global private education provider, specialising in the provision of higher education, English language programs and career training. Each year, over 55,000 students undertake programs provided by Study Group. Headquartered in Sydney, Study Group provides programs in Australia, NZ, the UK and the US, with around 125 established university partnerships globally of which 21 are exclusive.

CHAMP Private Equity and Petersen Investments took a controlling stake in the company in September 2006 which valued the business at $180m and were actively involved in the creation of the company's strategic plan and the recruitment of all key executives into the business. The company instigated a disciplined financial and operating reporting regime and restructured the business including relocating it from the UK to Sydney. During the investment timeframe, Study Group tripled earnings, grew its International Study Centres from zero to 17, completed two add-on acquisitions and had paid down net debt to zero at the time of exit. CHAMP made 5.3x its investment in a secondary sale for an IRR of 56.5%.

CHAMP Private Equity Managing Director Ben Sebel said: “During the nearly four year ownership of Study Group we added significant value to the business, working alongside Arvid Petersen and a strong management team.” CHAMP Director Darren Smorgon added: “Investment returns were driven by outstanding EBITDA growth, with significant investments in capital to upgrade existing facilities, expand campuses globally and develop new high education products.”

Excellence in Investor Reporting Award

The investor reporting award recognises fund managers for their excellence in reporting by assessing their adherence to the AVCAL reporting guidelines and exceeding investor reporting expectations. This award aims to promote a continual lifting of reporting standards as well as the benchmarks by which the industry is measured.

Crescent Capital

CHAMP Private Equity

Archer Capital

Brandon Capital Partners

CHAMP Private Equity, which has won an Excellence in Investor Reporting Award for the past three years running, now goes into the Investor Reporting Hall of Fame.

The AVCAL awards were announced at the AVCAL 2011 annual conference tonight.

Media contact: Stuart Snell, ph +61 (0)2 8243 7001, (0)416 650 906, stuart.snell@avcal.com.au