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Private equity investment in Australia supports half a million jobs

March 8, 2013

8 March 2013

Sydney, Australia

New research shows that Australian companies backed by private equity support an estimated half a million jobs.

This was one of the findings of the Deloitte Access Economics report The Economic Contribution of Private Equity in Australia, released by the Australian Private Equity and Venture Capital Association Ltd (AVCAL) today.

The study is based on data for 106 companies acquired by private equity since FY2000. This data was provided by AVCAL members representing approximately 70% of total private equity funds under management in Australia.

Summary of key findings:

Australian companies backed by private equity employ 262,000 people, making this group a larger employer than either the automotive or banking industries.
Private equity owned firms also indirectly support an estimated 251,000 additional jobs through flow-on effects to other businesses. As a result, private equity-backed companies in Australia account directly or indirectly for an estimated half a million jobs.
Private equity backed firms contribute $58.8 billion per annum to Australia's GDP.
Private equity backed firms generate more revenue than either the coal mining or the general insurance industries in Australia.

“Private equity structures have proved to be especially valuable where firms face the need to expand or refocus their operations in what may be fluid economic and commercial conditions," explained Dr Ric Simes from Deloitte Access Economics.

"For example, these firms may have an opportunity to develop a new technology or a need to restructure in a manner that a listed equity firm may find difficult. Thus, private equity contributes by adding value to investee firms and providing additional flexibility to the way in which firms are managed.

"This results in improved productivity for investee firms, with flow-on impacts throughout the economy."

AVCAL Chief Executive Dr Katherine Woodthorpe said, “Often commentators recycle anecdotal evidence about private equity, or focus only on high profile cases that don’t represent what happens in the majority of private equity investments in Australian businesses.

"Studies such as this are therefore important in helping to focus attention on the substance rather than the myths. And the reality is that private equity has an overwhelmingly positive impact on jobs and business growth."

The full report by Deloitte Access Economics is available from the AVCAL website .

Media contact:

Dr Kar Mei Tang, Head of Research, Ph +61 (0)2 8242 7000, karmei.tang@avcal.com.au

Downloads:

Report Summary

The full report

Media release (pdf)

AVCAL welcomes Government's Venture Australia initiative

February 26, 2013

18 February 2013

The Government undertook a thorough collaborative engagement process with industry and AVCAL welcomes the Innovation Statement 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.

The new round of the Innovation Investment Fund (IIF) with $350M committed will be a great boost to venture investing in Australia, especially taking into account the equal amount of private capital that will be invested alongside.

The commitment that any money returned to the Government will be recycled through the program is also very welcome. Improvements to the ESVCLP and VCLP structures will improve clarity for investors.

We particularly welcome clarification that gains from investments through a ESVCLP or VCLP will be on the capital account for all qualified domestic investors.

The review into Employee Share Schemes, which is currently underway, is also an important component of the overall program and AVCAL is consulting closely with the Government on the necessary changes to this program.

Currently innovators can be saddled with an income tax liability before their shares have realised any income and, given the inherent risks of early stage companies, may never be worth anything.

We need an employee share scheme that encourages, not punishes, our innovators.

AVCAL media release PDF

AVCAL issues summary

Media Release by Treasurer Swan and Minister Combet

Review of Venture Capital and Entrepreneurial Skills - Final Report

Venture Australia - Information Sheet

Media contact
Kate Bevitt, Marketing & Communications Executive, Ph +61 (0)2 8242 7000,
kate.bevitt@avcal.com.au

Australian PE continues to post steady returns in Q3 2012

February 18, 2013

7 February 2013

Boston, MA, and Sydney, Australia

The Cambridge Associates LLC Australia Private Equity and Venture Capital Index (C|A Australia Index) rose by 2.90% in the third quarter of 2012, according to the latest quarterly report released by The Australian Private Equity and Venture Capital Association Ltd (AVCAL) today.

For the 12 months ending 30 September 2012, the C|A Australia Index rose by 6.44%. Over the same period, the S&P/ASX 300 Index surged to record a return of 14.46%.

However, over the longer 3- and 5-year horizons the C|A Australia Index outperformed the public equities index, rising by 8.33% and 2.97% respectively on an annualised, net of fees basis compared to the S&P/ASX 300 Index's 1.69% and -3.61% annualised returns over the same horizons.

In the twelve months leading to 30 September 2012, a total of AU$2.2B was distributed back to LPs while $2.3B was drawn down.

Australian Private Equity & Venture Capital Association (AVCAL) CEO Dr Katherine Woodthorpe said, “The Index continues to demonstrate how private equity as a whole has consistently generated stable returns over the long term compared to the more volatile listed markets, on an after-fee basis.”

Eugene Snyman, Managing Director at Cambridge Associates’ office in Sydney, Australia, said: “While the strong performance of both public and private indices in the third quarter is good news to investors overall, we continue to see Australian private equity and venture capital offering greater stability long term.”

The report is published on the AVCAL website.

Cambridge Associates LLC Australia/AVCAL Index Returns for the period ending 30 September 2012

The Cambridge Associates LLC indices are an end-to-end calculation based on data compiled from 61 Australia private equity and 22 Australia venture capital funds, including fully liquidated partnerships, formed between 1997 and 2012.
1 Pooled end-to-end return, net of fees, expenses, and carried interest.
Sources: Cambridge Associates LLC, Bloomberg L.P., Standard & Poor's, Thomson Reuters Datastream, UBS AG and UBS Global Asset Management.

About Cambridge Associates

Founded in 1973, Cambridge Associates is a provider of independent investment advice and research to institutional investors and private clients worldwide. Today the firm serves over 900 global investors and delivers a range of services, including investment consulting, outsourced portfolio solutions, research services and tools (Research Navigatorsm and Benchmark Calculator), and performance monitoring, across all asset classes.

The firm compiles the performance results for over 5,000 private partnerships and their more than 65,000 portfolio company investments to publish its proprietary private investments benchmarks, of which the Cambridge Associates LLC U.S. Venture Capital Index® and Cambridge Associates LLC U.S. Private Equity Index® are widely considered to be among the standard benchmark statistics for these asset classes.

Cambridge Associates has more than 1,000 employees serving its client base globally and maintains offices in Arlington, VA; Boston; Dallas; Menlo Park, CA; London; Singapore; Sydney; and Beijing. Cambridge Associates consists of five global investment consulting affiliates that are all under common ownership and control. For more information about Cambridge Associates, please visit www.cambridgeassociates.com.

About AVCAL

AVCAL is the voice of venture capital (VC) and private equity (PE) in Australia. Our membership includes 54 domestic and international VC and PE managers active in Australia as well as pension/super funds, service providers and other stakeholders.

AVCAL is active in communicating, researching and advocating the significant contribution that VC and PE makes to the broader Australian economy. Australian VC and PE firms manage over $29bn in funds under management. They provide capital and expertise to companies in a range of business life-cycles: start-ups, SMEs and large organisations.

AVCAL VC and PE members focus on enhancing innovation, productivity, entrepreneurial activity and sustainability in the companies they invest in. Australian VC and PE firms back more than 500 companies which employ over 100,000 full-time equivalent jobs.

Since records began in the late 1990s, the industry has distributed around AU$16 billion to its limited partner investors which include pension/super funds, institutions and governments.

Media contacts

AVCAL – Dr Kar Mei Tang, ph +61 (0)2 8243 7000, karmei.tang@avcal.com.au
Cambridge Associates - Frank Lentini, Sommerfield Communications, ph +1 212 255 8386, lentini@sommerfield.com

View Cambridge Associates Q3 2012 report

View PDF of media release

Newsletter archive

January 15, 2013

Aust PE outperformed S&P/ASX 300 by 10% in the 12 months to Q2 2012

December 11, 2012

7 November 2012

Boston, MA, and Sydney, Australia

The Cambridge Associates LLC Australia Private Equity and Venture Capital Index (C|A Australia Index) rose by 2.95% (net of fees) in the twelve months leading to 30 June 2012, according to the latest quarterly report released by The Australian Private Equity and Venture Capital Association Ltd (AVCAL) today.

The C|A Australia Index outperformed the S&P/ASX 300 Accumulation Index (ASX 300) by 10% over the same period.

For the quarter ending 30 June 2012, the C|A Australia Index dipped by 0.28%, breaking five consecutive quarters of positive returns. Nevertheless, this was still 4.74% in excess of the ASX 300 Index’s return of -5.02%.

The C|A Australia Index’s medium to long term results remained steady, with annualised returns of 9.08%, 1.76% and 6.60% over the 3-, 5- and 10-year horizons respectively. In contrast, the ASX 300’s returns fluctuated between 5.56%, -4.15% and 6.94% over the corresponding horizons.

In the twelve months leading to 30 June 2012, a total of AU$2.3B was distributed back to LPs while $1.6B was drawn down. Over this period, distributions peaked in Q4 2011, followed by a deceleration in Q1 2012, before picking up again in Q2 2012.

Australian Private Equity & Venture Capital Association (AVCAL) CEO Dr Katherine Woodthorpe said, “We are really pleased to see how the numbers demonstrate the stable, long term value generated by private equity in their investors’ portfolios.”

“And, contrary to the idea that private equity performance numbers were artificially stabilised during the global financial crisis by ‘stale’ prices carried forward in private equity portfolios, we now have several years’ worth of post-crisis exits data, and it can be seen that private equity returns as a whole have consistently done well over the years compared to listed markets on a net cash-on-cash basis.”

Eugene Snyman, Managing Director at Cambridge Associates’ office in Sydney, Australia, said: “Following the slight decrease in distributions to LPs in the first quarter of 2012, the increase in Q2 will likely come as good news to investors. That said, this minor volatility in distributions is not a concern as Australian private equity continues to deliver steady long-term value.”

The report is published on the AVCAL website.

Cambridge Associates LLC Australia/AVCAL Index Returns for the period ending 30 June 2012

The Cambridge Associates LLC indices are an end-to-end calculation based on data compiled from 57 Australia private equity and 22 Australia venture capital funds, including fully liquidated partnerships, formed between 1997 and 2012.
1 Pooled end-to-end return, net of fees, expenses, and carried interest.
Sources: Cambridge Associates LLC, Bloomberg L.P., Standard & Poor's, Thomson Reuters Datastream, UBS AG and UBS Global Asset Management.

About Cambridge Associates
Founded in 1973, Cambridge Associates is a provider of independent investment advice and research to institutional investors and private clients worldwide. Today the firm serves over 900 global investors and delivers a range of services, including investment consulting, outsourced portfolio solutions, research services and tools (Research Navigatorsm and Benchmark Calculator), and performance monitoring, across all asset classes. The firm compiles the performance results for over 5,000 private partnerships and their more than 65,000 portfolio company investments to publish its proprietary private investments benchmarks, of which the Cambridge Associates LLC U.S. Venture Capital Index® and Cambridge Associates LLC U.S. Private Equity Index® are widely considered to be among the standard benchmark statistics for these asset classes. Cambridge Associates has more than 1,000 employees serving its client base globally and maintains offices in Arlington, VA; Boston; Dallas; Menlo Park, CA; London; Singapore; Sydney; and Beijing. Cambridge Associates consists of five global investment consulting affiliates that are all under common ownership and control. For more information about Cambridge Associates, please visit www.cambridgeassociates.com.

About AVCAL
AVCAL is the voice of venture capital (VC) and private equity (PE) in Australia. Our membership includes 54 domestic and international VC and PE managers active in Australia as well as pension/super funds, service providers and other stakeholders. AVCAL is active in communicating, researching and advocating the significant contribution that VC and PE makes to the broader Australian economy. Australian VC and PE firms manage over $29bn in funds under management. They provide capital and expertise to companies in a range of business life-cycles: start-ups, SMEs and large organisations. AVCAL VC and PE members focus on enhancing innovation, productivity, entrepreneurial activity and sustainability in the companies they invest in. Australian VC and PE firms back more than 500 companies which employ over 100,000 full-time equivalent jobs. Since records began in the late 1990s, the industry has distributed around A$16 billion to its limited partner investors which include pension/super funds, institutions and governments.

Media contacts

AVCAL - Kate Bevitt, ph +61 (0)2 8243 7000, kate.bevitt@avcal.com.au
Cambridge Associates - Frank Lentini, Sommerfield Communications, ph +1 617 939 9094, lentini@sommerfield.com

View Cambridge Associates Q2 2012 report

View PDF of media release

Australian private equity outperformed S&P/ASX 300 by 14% in Q1 2012

November 7, 2012

15 August 2012

Boston, MA, and Sydney, Australia

The Cambridge Associates LLC Australia Private Equity and Venture Capital Index (C|A Australia Index) rose by 7.80% (net of fees) in the twelve months leading to 31 March 2012, according to the latest quarterly report released by The Australian Private Equity and Venture Capital Association Ltd (AVCAL) today.

The C|A Australia Index outperformed the S&P/ASX 300 Accumulation Index (ASX 300) by 14.07% over the same period.

For the quarter ending 31 March 2012, the C|A Australia Index rose by 1.43%, marking the fifth consecutive quarter of positive returns. Nine of the last ten quarters have now had positive returns (the sole exception being Q4 2010 which saw the index fall by 0.82%). Similarly, nine of the last ten years have also recorded positive returns (the exception being the year leading to Q1 2009).

The C|A Australia Index’s medium to long term results remained steady, with annualised returns of 9.49%, 3.18% and 7.38% over the 3-, 5- and 10-year horizons respectively. In contrast, the ASX 300’s returns fluctuated between 11.35%, -2.10% and 6.93% over the corresponding horizons.

In the twelve months leading to 31 March 2012, a total of AU$2.6B was distributed back to LPs while $2.1B was drawn down. Over this period, distributions peaked in Q4 2011 before falling again due to a deceleration in exit activity in Q1 2012.

Australian Private Equity & Venture Capital Association (AVCAL) CEO Dr Katherine Woodthorpe said, “Private equity returns continue to do well and we are encouraged by the relative stability of those returns in contrast with the more volatile listed markets. The longer-term performance, in particular, provides a strong argument for why private equity should be in any well-managed institutional portfolio with a long-term timeframe.”

Eugene Snyman, Managing Director at Cambridge Associates’ office in Sydney, Australia, said: “The consistency of Australian PE performance can benefit Institutional Investors looking to address short-term public market volatility. This performance is in line with what we are seeing in developed markets around the world, and we expect Australian PE to continue attracting investor interest.”

The report is published on the AVCAL website.

The Cambridge Associates LLC indices are an end-to-end calculation based on data compiled from 54 Australia private equity and 22 Australia venture capital funds, including fully liquidated partnerships, formed between 1997 and 2012.
1 Pooled end-to-end return, net of fees, expenses, and carried interest.
Sources: Cambridge Associates LLC, Bloomberg L.P., Standard & Poor's, Thomson Reuters Datastream, UBS AG and UBS Global Asset Management.

About Cambridge Associates
Founded in 1973, Cambridge Associates is a provider of independent investment advice and research to institutional investors and private clients worldwide. Today the firm serves over 900 global investors and delivers a range of services, including investment consulting, outsourced portfolio solutions, research services and tools (Research Navigatorsm and Benchmark Calculator), and performance monitoring, across all asset classes. The firm compiles the performance results for more than 4,700 private partnerships and their more than 64,000 portfolio company investments to publish its proprietary private investments benchmarks, of which the Cambridge Associates LLC U.S. Venture Capital Index® and Cambridge Associates LLC U.S. Private Equity Index® are widely considered to be among the standard benchmark statistics for these asset classes. Cambridge Associates has more than 1,000 employees serving its client base globally and maintains offices in Arlington, VA; Boston; Dallas; Menlo Park, CA; London; Singapore; Sydney; and Beijing. For more information about Cambridge Associates, please visit www.cambridgeassociates.com.

About AVCAL
AVCAL is the voice of private equity (PE) and venture capital (VC) in Australia. Membership includes 70 domestic and international PE and VC managers active in Australia as well as pension/super funds, service providers and other stakeholders. AVCAL is active in communicating, researching and advocating the significant contribution that PE and VC makes to the broader Australian economy. AVCAL members account for over $26bn of investments and are key providers of capital, funding innovation, productivity enhancements, entrepreneurial activity and sustainability. Australian PE and VC firms back over 500 Australian based companies.

Media contacts
AVCAL – Kar Mei Tang, ph +61 (0)2 8243 7000, karmei.tang@avcal.com.au
Cambridge Associates - Frank Lentini, Sommerfield Communications, ph +1 212 255 8386, lentini@sommerfield.com

Report

PDF version of media release

Private equity fundraising rebounds with foreign investor support

November 1, 2012

31 October 2012

FY2012 was the best fundraising year for the local venture capital (VC) and private equity (PE) industry since 2007/08, according to the Australian Private Equity and Venture Capital Association (AVCAL)/Ernst & Young 2012 Yearbook released today.

Over $3.3b was raised by 21 Australian VC and PE funds in FY2012, a 59% increase from the previous year. Commitments from overseas investors constituted more than half the total amount raised, reflecting an ongoing trend in recent years.

AVCAL CEO Dr Katherine Woodthorpe said, “Overseas investors have continued to take advantage of Australia’s domestic VC and PE expertise, its strong economy, coupled with its financial stability and the rule of law. Despite challenging market conditions, deal activity in the venture, small- and mid-market segments that make up the majority of VC and PE investments in Australia has remained relatively resilient.”

Ernst & Young Oceania Managing Partner, Private Equity, Bryan Zekulich said, “The fact that most of these funds were raised from offshore investors demonstrates Australia’s resilience amid ongoing global financial market volatility. More particularly, it reflects the world class performance of the Australian industry, relative to its global counterparts.”

For the VC sector, most of the total amount raised was directed to a small number of funds. Nearly all of these commitments were sourced from Government-backed programmes and overseas investors.

“This highlights the critical importance of long-term support programmes by the Government, as is the case in most other developed countries, to build a sustainable innovation ecosystem in Australia,” said Dr Woodthorpe.

In contrast to the longer term confidence indicated by the improved fundraising numbers, portfolio investment and the divestment trends in FY2012 remained subdued amid continued uncertainty over the global economic outlook, as well as concerns over the potential easing of the Chinese economy and the Australian mining boom.

Total investment amounts in FY2012 fell by 24% compared to the previous year. The number of managers completing deals in FY2012 was the lowest in the last ten years, reflecting a relatively muted deal climate.

“The global VC and PE industry currently faces difficult hurdles in light of financial market volatility, economic instability and regulatory reforms. These changes in recent years have contributed to the ongoing consolidation of the industry on a global scale. Australia has not been exempt from this impact.”

“Overall deal activity was lower than the previous year. However, the gradual improvement in vendor-buyer price expectations and more realistic company valuations should result in an attractive buying environment for VC and PE firms with capital to invest,” said Dr Woodthorpe.

2012 Yearbook highlights

Fundraising in FY2012 rose by 59% in FY2012 to $3.3b, led by a small number of managers. This was the largest amount raised annually since the beginning of the GFC.
Overseas investors continued to increase their exposure to Australian VC and PE funds, accounting for more than half of all new commitments. However, with many local institutional investors remaining sidelined, some PE managers have continued to delay their fundraising plans.
Investments by VC and PE funds in FY2012 fell by 24% to $2.9b invested in 146 companies as local M&A activity remained subdued.
Divestment activity in FY2012 was relatively quiet with 51 companies fully/partially divested compared to 71 companies in FY2011.
As at 30 June 2012, Australian PE funds had total funds under management amounting to $26.5b while Australian VC funds managed $2.9b. There were 320 companies in all PE portfolios combined, while VC portfolios backed a total of 225 companies.

2012 Yearbook

AVCAL 2012 Yearbook publication

AVCAL 2012 Yearbook data file

Media contact

Kate Bevitt, Marketing & Communications Executive
Ph +61 (0)2 8242 7000
kate.bevitt@avcal.com.au

View pdf of the media release

Australian private equity returns continue to outperform

September 24, 2012

8 February 2012

Boston, MA, and Sydney, Australia

The Cambridge Associates LLC Australia Private Equity and Venture Capital Index (CA Australia Index) demonstrates that private equity continues to deliver stable, solid returns in periods of high volatility for public equities.

The CA Australia Index, which measures private equity and venture capital returns in Australia, outperformed the S&P/ASX 300 Index over all time horizons for up to 10 years, according to the latest quarterly report released today.

For the quarter ended 30 September 2011, the CA Australia Index had annualised returns of 4.79%, 3.63%, 3.92% and 7.41% over one, three, five and ten years respectively. This compares very positively with the public equities indices, which recorded negative annualised returns over all corresponding periods, with the sole exception of the 10-year horizon.

Australian Private Equity & Venture Capital Association (AVCAL) CEO Dr Katherine Woodthorpe said: “The consistent outperformance of Australian private equity funds when compared to public equities indices is particularly noteworthy given that post-GFC, the total returns for private equity and venture capital investments have not exhibited the same kind of volatility and downside seen in the public equity markets.

“These results demonstrate a major benefit of private equity as an asset class to institutional investors – helping their wider portfolio returns weather short-term public market volatility, while at the same time targeting superior long-term returns.”

Eugene Snyman, Managing Director at Cambridge Associates’ office in Sydney, Australia, said: “The consistent nature of Australian PE returns is indeed noteworthy and similar to what we have evidenced in other developed PE markets around the world.”

This is the sixth quarterly report from the Index, which is a result of a strategic partnership between AVCAL and Cambridge Associates, global provider of independent research and investment consulting services.

The report is published on the AVCAL website www.avcal.com.au.

Cambridge Associates LLC Australia/AVCAL Index Returns for the period ending 30 September 2011

The Cambridge Associates LLC Australia Private Equity & Venture Capital index is an end-to-end calculation based on data compiled from 52 Australia private equity and 19 Australia venture capital funds, including fully liquidated partnerships, formed between 1997 and 2010.
1 Pooled end-to-end return, net of fees, expenses, and carried interest.
Sources: Bloomberg L.P., Cambridge Associates LLC, Standard & Poor's, Thomson Datastream, UBS AG and UBS Global Asset Management.

About Cambridge Associates

Founded in 1973, Cambridge Associates is a provider of independent investment advice and research to institutional investors and private clients worldwide. Today the firm serves over 900 global investors representing nearly $3 trillion in aggregate assets. Cambridge Associates delivers a range of services, including investment consulting, outsourced portfolio solutions, research services and tools (Research Navigator and Benchmark Calculator), and performance monitoring, across all asset classes. The firm compiles the performance results for more than 4,500 private partnerships and their more than 62,000 portfolio company investments to publish its proprietary private investments benchmarks, of which the Cambridge Associates U.S. Venture Capital Index® and Cambridge Associates U.S. Private Equity Index® are widely considered to be the industry-standard benchmark statistics for these asset classes. Cambridge Associates has more than 1,000 employees serving its client base globally and maintains offices in Arlington, VA; Boston; Dallas; Menlo Park, CA; London; Singapore; Sydney; and Beijing. www.cambridgeassociates.com

About AVCAL

AVCAL is the voice of private equity (PE) and venture capital (VC) in Australia. Membership includes 70 domestic and international PE and VC managers active in Australia as well as pension/super funds, service providers and other stakeholders. AVCAL is active in communicating, researching and advocating the significant contribution that PE and VC makes to the broader Australian economy. AVCAL members account for over $26bn of investments and are key providers of capital, funding innovation, productivity enhancements, entrepreneurial activity and sustainability. Australian PE and VC firms operate over 500 Australian-based companies. www.avcal.com.au www.twitter.com/avcal1 www.linkedin.com/in/avcal

Media contacts:

AVCAL - Stuart Snell ph +61 (0)2 8243 7001, (0)416 650 906, stuart.snell@avcal.com.au.
Cambridge Associates - Frank Lentini, Sommerfield Communications, ph +1 212 255 8386, lentini@sommerfield.com.

Report
PDF version of media release

New AVCAL Chair

September 24, 2012

15 February 2012

The Australian Private Equity & Venture Capital Association (AVCAL) has appointed Mr David Brown as the new Chair of the governing Council.

Mr Brown, who has been a Member of the Council for the past three and a half years, formally takes over the role at the next Council meeting tomorrow.

AVCAL CEO Dr Katherine Woodthorpe said Mr Brown’s long background in funds management and private equity as an investor reflects the diverse range of stakeholders across the industry.

“David’s investor background reinforces the fact that AVCAL comprises the full private equity and venture capital community, from investors to private equity practitioners and service providers. David is passionate about private equity as an asset class that delivers strong and reliable returns and is already contributing his strategic insights and knowledge to advocate on behalf of the industry.”

Mr Brown replaces industry stalwart Andrew Rothery who has held the chairmanship for the past three years.

“I'd like to express my deep gratitude and appreciation to the out-going Chair Andrew Rothery, who has made a huge contribution to the private equity industry over his time as Chair. Andrew’s skills and commitment have been invaluable in guiding AVCAL over that period,” Dr Woodthorpe said.

Mr Brown said: “The Private Equity and Venture industry is an important and valuable driver of growth and innovation in the Australian economy. Our companies are at the forefront of productivity growth and the benefits flow directly back to Australians in the form of investment returns via their Super funds. Private Equity has emerged from the GFC as one of the best performing asset classes over the last few years, delivering returns well above inflation and the stock market.”

“It has always been a delight to work with such an enthusiastic Council and I look forward to engaging with and listening to a wide spectrum of our stakeholders.”

Media contact
Stuart Snell, Communications Manager, Ph +61 (0)2 8242 7001, (0)416 650 906, stuart.snell@avcal.com.au

PDF version of media release

Australian private equity returned 7.85% in 2011

September 24, 2012

31 May 2012

Boston, MA, and Sydney, Australia

The Cambridge Associates LLC Australia Private Equity and Venture Capital Index (CA Australia Index) rose by 7.85% in 2011, significantly outperforming the S&P/ASX 300 Accumulation Index which fell by 10.98% over the same period. This translated to an outperformance of 18.83% - net of fees - for the 2011 calendar year.

The CA Australia Index outperformed the S&P/ASX 300 Accumulation Index over nearly all time horizons for up to 10 years, according to the latest quarterly report released by the Australian Private Equity and Venture Capital Association Ltd (AVCAL) today.

As of 31 December 2011, the CA Australia Index had annualised returns of 7.85%, 7.11%, 3.29% and 7.52% over one, three, five and ten years respectively. This relatively stable pattern of returns contrasted sharply with that of the S&P/ASX 300 Accumulation Index, which fluctuated between annualised returns of -10.98%, 7.67%, -2.39% and 6.14% over the same horizons.

Pooled returns from most investment vintage years have performed very well to date. And despite the lacklustre performance of public equities in the last two years, companies receiving their initial injections of private equity and venture capital investment in 2010 and 2011 have performed well by comparison, recording pooled returns of 14.26% and -3.43% respectively as of the end of 2011.

Australian Private Equity & Venture Capital Association (AVCAL) CEO Dr Katherine Woodthorpe said: “The collective performance of our members has been simply outstanding, even despite the effects of the global financial crisis over the preceding years. It simply further demonstrates the value of investing in private equity and venture capital. This asset class generates the kind of long-term returns that investors – whether they are superannuation funds, sovereign wealth funds or other wealth management funds -- are crying out for today.”

Eugene Snyman, Managing Director at Cambridge Associates’ office in Sydney, Australia, said: “This consistently strong performance bodes well for fundraising and investment activity through the remainder of the year and into 2013.”

This is the seventh quarterly report from the Index, which is a result of a strategic partnership between AVCAL and Cambridge Associates, global provider of independent research and investment consulting services.

The report is published on the AVCAL website www.avcal.com.au.

Cambridge Associates LLC Australia/AVCAL Index Returns for the period ending 31 December 2011

The Cambridge Associates LLC Australia Private Equity & Venture Capital index is an end-to-end calculation based on data compiled from 51 Australia private equity and 20 Australia venture capital funds, including fully liquidated partnerships, formed between 1997 and 2011.
1 Pooled end-to-end return, net of fees, expenses, and carried interest.
Sources: Bloomberg L.P., Cambridge Associates LLC, Standard & Poor's, Thomson Datastream, UBS AG and UBS Global Asset Management.

About Cambridge Associates
Founded in 1973, Cambridge Associates is a provider of independent investment advice and research to institutional investors and private clients worldwide. Today the firm serves over 900 global investors representing nearly $3 trillion in aggregate assets. Cambridge Associates delivers a range of services, including investment consulting, outsourced portfolio solutions, research services and tools (Research Navigatorâ� and Benchmark Calculator), and performance monitoring, across all asset classes. The firm compiles the performance results for more than 4,500 private partnerships and their more than 62,000 portfolio company investments to publish its proprietary private investments benchmarks, of which the Cambridge Associates U.S. Venture Capital Index® and Cambridge Associates U.S. Private Equity Index® are widely considered to be the industry-standard benchmark statistics for these asset classes. Cambridge Associates has more than 1,000 employees serving its client base globally and maintains offices in Arlington, VA; Boston; Dallas; Menlo Park, CA; London; Singapore; Sydney; and Beijing. www.cambridgeassociates.com

Media contacts:
• AVCAL – Kar Mei Tang, ph +61 (0)2 8243 7000, karmei.tang@avcal.com.au.
• Cambridge Associates - Frank Lentini, Sommerfield Communications, ph +1 212 255 8386, lentini@sommerfield.com.

Report

PDF version of media release

AVCAL 2012 award winners announced

September 24, 2012

24 September

The winners of the 2012 AVCAL Awards were announced at a gala dinner last night for nearly 500 fund managers, domain experts, investors and advisors attending AVCAL's annual 'Alpha' conference.

The winners were:

For Excellence in Investor Reporting, awards were presented to Brandon Capital Partners and CHAMP Ventures.

In recognition of vision, achievement, and entrepreneurship and outstanding returns for an exit in the 2011-2012 financial year:

Best Early Stage Award went to Starfish Ventures for telecomm expense software company, Quickcomm.

Best Expansion Stage Award went to Equity Partners for designer of premium compression sportswear Skins.

Best Management Buyout under $100 million went to Archer Capital for specialised container lessor, SCF.

Best Management Buyout between $100-500 million went to Archer Capital for leading sports goods retailer, Rebel Group.

And making it a trifecta, was Archer Capital's win together with co-investor HarbourVest in the Best Management Buyout over $500 million category for software giant MYOB.

Last night also saw the presentation of the inaugural Michael Hirshorn Award which honours a PE or VC-backed company whose products or services have been instrumental in doing public good and delivering to the community. The award went to BTF Ltd and was accepted by the company's former CEO, Mark Gauci, and Mike's former business partner, Simon Uziclas from Four Hats Capital.

AVCAL CEO Dr. Katherine Woodthorpe said the award to BTF recognised the ground-breaking work the company achieved in producing biological controls to deliver safe drinking water. BTF is now owned by bioMerieux France, a world leader in industrial microbiology.

"BTF's science is now helping people right around the globe access safe drinking water so it is a very worthy recipient of this new award.

“It is no exaggeration to say that the Australian biotech industry would be nowhere near its scale today if it hadn't been for Mike, nor too would the VC industry.

“Mike's death deprived us all of a great leader and friend and this annual award will help remind us all of the principles that Mike applied so scrupulously throughout his career," said Dr. Woodthorpe.

For further information - Kate Bevitt, +61 2 8243 7001, kate@avcal.com.au

PDF of the media release

AVCAL 2011 award winners announced

February 20, 2012

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

Australian PE and VC deliver stable, solid returns

January 16, 2012

15 November 2011

Boston, MA, and Sydney, Australia

The Cambridge Associates LLC Australia Private Equity and Venture Capital Index (CA Australia Index) continues to outperform the S&P/ASX 300 Index over multiple time horizons.

The CA Australia Index, which measures private equity and venture capital returns in Australia, also outperforms other key asset benchmarks over a number of different time periods.

For the quarter ended 30 June 2011, the CA Australia Index had annualised returns of 8.59%, 2.42%, 4.23% and 7.81% over one, three, five and 10 years respectively.

The index’s quarterly return of 3.18% also compares favourably against minus 4.26% for the S&P/ASX 300 Index, 2.3% for the S&P/ASX Small Ordinaries Index and minus 9.31% for the UBS Australian Composite Bond Index.

The Australian industry benchmark is even more impressive in US dollar terms, with one-, three- and five-year annualized returns of 37.63%, 8.33% and 12.66% respectively.

Australian Private Equity & Venture Capital Association (AVCAL) CEO Dr Katherine Woodthorpe said: “The index demonstrates that private equity is overall delivering substantial – and importantly, consistent – net returns to investors over multiple time horizons. The increased number of exits this year has also seen many of these investments delivering excellent returns to the pension funds and other institutional funds who are the primary investors in this asset class.”

“We have been very pleased with the response from the Australian private equity and venture capital fund manager community. Since we began releasing the benchmark five quarters ago, the number of participating funds has increased by more than 60 percent,” said Eugene Snyman, Managing Director at Cambridge Associates’ office in Sydney, Australia.

This is the fifth quarterly report from the Index, which is a result of a strategic partnership between AVCAL and Cambridge Associates, global provider of independent research and investment consulting services.

The report

Cambridge Associates LLC Australia/AVCAL Index Returns for the period ending June 30 2011

Index (A$)	1-Quarter	1-Year	3-Years	5-Years	10-Years

Cambridge Associates LLC Australia Private Equity & Venture Capital Index (A$) ¹	3.18	8.59	2.42	4.23	7.81
Cambridge Associates LLC Australia Private Equity & Venture Capital Index (US$) ¹	6.78	37.63	8.33	12.66	16.25
S&P/ASX 300 Index	(4.26)	11.90	0.26	2.37	7.22
S&P/ASX Small Ordinaries Index	2.33	5.55	8.05	6.50	6.18
UBS Australia Bank Bill Index	1.23	4.98	4.78	5.62	5.44
UBS Australian Composite Bond Index	(9.31)	16.41	(2.59)	1.21	8.18

The Cambridge Associates LLC Australia Private Equity & Venture Capital index is an end-to-end calculation based on data compiled from 52 Australia private equity and 18 Australia venture capital funds, including fully liquidated partnerships, formed between 1997 and 2010.

1Pooled end-to-end return, net of fees, expenses, and carried interest.

Sources: Bloomberg L.P., Cambridge Associates LLC, Standard & Poor's, Thomson Datastream, UBS AG and UBS Global Asset Management.

About Cambridge Associates

Founded in 1973, Cambridge Associates is a provider of independent investment advice and research to institutional investors and private clients worldwide. Today the firm serves over 900 global investors representing nearly $3 trillion in aggregate assets. Cambridge Associates delivers a range of services, including investment consulting, outsourced portfolio solutions, research services and tools (Research Navigatorâï¿½ and Benchmark Calculator), and performance monitoring, across all asset classes. The firm compiles the performance results for more than 4,500 private partnerships and their more than 62,000 portfolio company investments to publish its proprietary private investments benchmarks, of which the Cambridge Associates U.S. Venture Capital Index® and Cambridge Associates U.S. Private Equity Index® are widely considered to be the industry-standard benchmark statistics for these asset classes. Cambridge Associates has more than 1,000 employees serving its client base globally and maintains offices in Arlington, VA; Boston; Dallas; Menlo Park, CA; London; Singapore; Sydney; and Beijing. www.cambridgeassociates.com

About AVCAL

AVCAL, the Australian Private Equity and Venture Capital Association Limited, was established in 1992 as a forum and voice for participants in the private equity and venture capital industry. Membership includes almost all the domestic and international PE and VC fund managers active in Australia. PE and VC are key sources of capital for companies of all sizes, to enable their growth and realise their potential. VC is one of the few sources of capital available to enable entrepreneurs to convert innovative ideas into sustainable enterprises. Australian PE has around $23.6b under management while VC has around $2.9b under management. www.avcal.com.au www.twitter.com/avcal1www.linkedin.com/in/avcal

Media contact:

AVCAL - Stuart Snell ph +61 (0)2 8243 7001, (0)416 650 906, stuart.snell@avcal.com.au.
Cambridge Associates - Frank Lentini, Sommerfield Communications, ph +1 212 255 8386, lentini@sommerfield.com.

Private equity activity improves, AVCAL 2011 Yearbook

January 16, 2012

4 November 2011

Private equity (PE) and venture capital (VC) fundraisings, investments and divestments have grown over the past year, according to the latest analysis of annual industry data.

The Australian Private Equity and Venture Capital Association (AVCAL) has today released the 2011 Yearbook, an annual report of the primary activities of Australian PE and VC firms for financial year 2011.

The amount invested by PE and VC fund managers in Australian companies is the highest in the past three years at $3.6 billion dollars, with over 40% invested into one deal (Healthscope). The number of companies acquired in FY2011 at 150 is the lowest in recent years, reflecting greater investment selectivity and an increasing concentration of activity within the industry.

AVCAL CEO Dr Katherine Woodthorpe said: “2011 has seen more funds raised but by fewer fund managers, marking a period of consolidation within the industry. However, there has been an increase in the number of exits and many of them have generated excellent returns. Overall the data is encouraging, demonstrating the strength and stability of the industry in times of wider economic volatility and uncertainty.”

The importance of foreign capital in funding Australian businesses is clearer than ever, with around half of all new commitments to Australian fund managers sourced from overseas. Businesses funded by PE mostly comprise small and medium-sized enterprises, which make a significant contribution to Australia’s current economic growth story. The innovative, high-growth companies funded by VC are potential key drivers of our economic competitiveness in the future.

“The trend of declining VC activity has continued at the very time Australia should be building better pipelines to accelerate innovation and commercialise research and development investments by the Australian taxpayer. Australia desperately needs a policy framework to do this so that we have an ongoing process to give our nation a competitive edge in the years to come,” Dr Woodthorpe said.

Ernst & Young Oceania Managing Partner, Private Equity, Bryan Zekulich said: “We believe the private equity and venture capital industry needs access to accurate and detailed information about the performance of the industry to help explain to stakeholders how important this industry is to Australia's economy. As AVCAL's research partner, we are pleased to support the industry, and are delighted to be sponsoring the 2011 Yearbook.”

2011 Yearbook highlights

After three years of consecutive declines in PE and VC fundraising, total commitments increased by 72% y-o-y to $2,342m in FY2011.
Companies in the expansion/growth stage accounted for over a quarter of total companies receiving investments.
The life sciences sector (including healthcare) was the primary recipient of PE and VC investment in FY2011, accounting for almost half of the total amount invested and 29% of the total number of companies invested in.
Five of the top 10 deals by amount invested were secondary deals to other PE funds. Secondary deals grew nearly seven-fold by amount invested compared to FY2010.
There were 89 exits of 73 companies in FY2011, a 46% y-o-y increase by number of companies.
As in previous years, divestments via trade sales continued to be the preferred means of exit, accounting for 42% of all companies divested.
PE backed companies were held for an average period of investment of five years, while VC-backed companies were held for seven years on average, prior to a full/partial exits in 2011.

Fundraising activity in FY2011 was mixed. PE and VC funds raised $2,342m over the year: 72% more than the previous year, although 77% was raised by three funds alone. The challenging fundraising climate saw a number of PE fund managers shelving or delaying their fundraising plans. This resulted in the number of fund managers raising new commitments in FY2011 decreasing 39% y-o-y to 14.

Investments by PE and VC funds increased 44% y-o-y to $3,638m, however much of this was due to funds raised before the global financial crisis, reflecting on-going difficulties in raising new funds. The top 10 deals accounted for 74% of total investment amounts in FY2011. However, the number of companies receiving investments declined to 150 from 183 the previous year. Of the 213 investments completed in FY2011, 63% or 135 investments were follow-on deals. VC investments saw a 35% y-o-y decrease to $120m, with follow-on rounds accounting for 70% of this.

Divestments gained momentum in FY2011, with a total of 89 full/partial exits of 73 companies, an increase from 62 divestments of 50 companies in FY2010. Similarly to the previous year, trade sales remained the most popular method of exit, accounting for 42% of all companies divested. There were also more secondary sales to other PE firms, accounting for 11% of all companies divested. There were no full exits via IPOs (but one partial exit). VC exits generally performed well, with more divestments and higher net proceeds recorded compared to the previous two years.

AVCAL 2011 Yearbook

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

AVCAL 2010 Award recipients announced

January 11, 2012

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.

AVCAL congratulates Southern Cross on REVCF mandate

January 11, 2012

15 December 2011

The Australian Private Equity and Venture Capital Association (AVCAL) congratulates Southern Cross Venture Partners on securing the mandate to run the Commonwealth Government’s first Renewable Energy Venture Capital Fund (REVCF).

AVCAL applauds the Government for moving quickly to establish the $200 million fund ($100m provided by Government and $100m by private investors) since announcing its creation earlier this year as part of the Commonwealth’s clean energy strategy.

AVCAL CEO Dr Katherine Woodthorpe said the REVCF mandate recognises the unique role venture capital fund managers play in commercialising Australian innovation, and the expertise that they bring including their ability to attract private investment capital.

"The Government recognises that it must play an important part in funding and coordinating investment in innovation if Australia is to help lead the commercialisation of renewable energy technologies," she said.

"Venture capital fund managers – usually former successful entrepreneurs, scientists, doctors and engineers – are ideally placed to help commercialise Australian innovation by applying a business mindset and working hands-on with the company founders and management to generate returns for investors."

Dr Woodthorpe commended the Government for supporting the development of Australian companies that are commercialising new technologies and for recognising the unique expertise of venture capital (VC) fund managers in facilitating that process.

The REVCF mandate follows the Government’s recent announcement of its final round of funding under the long-standing the Innovation Industry Fund to commercialise Australian innovation and research.

Current VC industry highlights: see AVCAL’s newly released VC fact sheet.
Commentary background: VC vital to our nation's hi-tech survival.
REVCF webpage and Minister for Resources and Energy Martin Ferguson’s media release.

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

AVCAL welcomes venture capital funding, calls for more

January 11, 2012

7 December 2011

The Australian Private Equity and Venture Capital Association (AVCAL) welcomes the Commonwealth Government's announcement to fund up to $100 million to venture capital (VC) funds to commercialise Australian innovation and research.

This is pleasingly greater than the expected $60 million which was the remaining allocation for the IIF program.

The funding from the Innovation Investment Fund (IIF) program must be matched by private sector investors before VC fund managers can invest the "IIF tranche four" funds in early stage companies developing new technology.

AVCAL CEO Dr Katherine Woodthorpe said the IIF program has proved successful since it started in 1997, enabling a pool of $524 million of government and private capital to invest in over 100 promising early-stage companies.

A 2010 review of the IIF program revealed that the first IIF round between 1997 and 2000 saw five VC funds raising $197m, which had distributed $362m to their investors.

"The IIF has led to a number of commercial successes and has been able to deliver returns to investors, including the government, which has been able to recycle those funds back into the program."

However, despite the success of the program, there has been no policy commitment to continue the IIF beyond this last round or for the introduction of something to replace it.

Dr Woodthorpe said: "The Government commendably spends over $8 billion a year on research and development but very little on helping to commercialise that investment. The IIF has been a vital program in the commercialisation effort but a lot more work is needed if we want Australia to capitalise on and retain its innovation for national growth and employment."

She said the VC industry has been contracting in Australia and around the world, including the US. VC fund managers take on the financial risk to help innovators commercialise their concepts, and there needs to be greater policy support for these commercial "enablers".

Applications for this last round of IIF funding from VC fund managers close 2 July 2012.

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

AVCAL congratulates Archer Capital on awards

January 11, 2012

8 November 2011

Australian private equity firm Archer Capital has taken out two coveted awards at the 24th Asian Venture Capital Journal (AVCJ) Forum in Hong Kong yesterday.

Archer Managing Director Peter Wiggs took out the 2011 AVCJ Award for Private Equity Professional of the Year, while Archer Capital also won the Firm of the Year Award.

The Australian Private Equity and Venture Capital Association (AVCAL) CEO Dr Katherine Woodthorpe, who has been a guest speaker at the Forum, said: "Archer has been one of the most active private equity firms in Australia recently and their successes have been rightly recognised by these awards.

"Archer and Peter Wiggs personify the true characteristics of our industry, which are identifying good investment opportunities, active company stewardship, genuine partnership with company management, and building investee company operations and revenue to realise good returns for investors."

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

Australia's premier PE and VC conference

January 11, 2012

12 September 2011

Australia’s leading representatives from private equity and venture capital will be joined by a number of international counterparts for two days at the annual premier industry event on 21 and 22 September.

The Australian Private Equity and Venture Capital Association’s (AVCAL) 2011 annual conference will provide AVCAL members a unique opportunity to hear first-hand about the latest trends and developments, as well as to discuss the current issues affecting the industry and the economy.

AVCAL CEO Dr Katherine Woodthorpe said this members-only event, AVCAL’s 18th annual conference, is Australia’s key information sharing and networking event for the industry.

“A great line-up of speakers is on offer and we will be pre-releasing some important industry data from the 2011 AVCAL/Ernst & Young Yearbook which will be fully released shortly after conference,” Dr Woodthorpe said.

“It’s important to take stock as an industry. Recent years for most sectors have been challenging but one thing that shines through for private equity in these volatile times is that as an asset class returns have been stable and high-performing.”

Conference keynote speaker, US-based Riverside Co-CEO Stewart Kohl said: “In these volatile and challenging times, private equity as an asset class is undergoing a shakeout. The best performing firms are proving themselves with creativity, resilience and outsized returns.

“I’m excited to share with this leading audience of Australian private equity practitioners the things that we as an industry are doing around the world to ensure our ability to continue to meet the needs of our investors, portfolio companies and communities.”

Other highlights from the program include:

International perspectives on global PE and VC developments - a global panel including Joncarlo Mark, ex CalPERS; Simon Kinzett, Vice President, Campbell Lutyens; Alicia Gregory, Portfolio Manager, MLC Private Equity; and Alex Wilmerding, Principal, Pantheon
How technology is driving our future - Hugh Bradlow , Chief Technology Officer, Telstra
Macroeconomic perspectives and trends - Bill Evans, Global Economist, Westpac
Concurrent sessions on PE and VC:
VC sessions include a study of Asian impacts, stories from entrepreneurs and their backers, and shifts in the VC landscape
PE sessions include how to raise a fund in 2012, the lower-mid market and negotiating volatility and opportunities, and lessons through the lending cycle.

The annual AVCAL awards recognising outstanding performance and achievement will also be announced at the conference.

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

Code of Private Equity Governance

January 11, 2012

7 September 2011

The Australian Private Equity and Venture Capital Association (AVCAL) has today released its Governance Code for the private equity industry.

Assistant Treasurer and Minister for Financial Services and Superannuation Bill Shorten welcomed the code at a launch today, saying: “I congratulate AVCAL on developing a Code of Private Equity Governance. Corporate governance is particularly important for private equity general partners given their active role in the management of the entities they invest in.

“As a growing and dynamic part of Australia’s financial services industry, I am keen to see private equity continue to improve Australia’s overall productivity and strengthen Australia as a financial services centre.”

AVCAL CEO Dr Katherine Woodthorpe said that the release of the Governance Code is an important milestone for the private equity industry.

“The Governance Code codifies many of the activities and governance mechanisms already being implemented by private equity industry participants.

“Formalising good governance practices by introducing the Governance Code means that we hold our industry up to high standards. It also demonstrates to our stakeholders that private equity invests over the long term to create structures and value that endure beyond private equity ownership.”

Dr Woodthorpe said that although AVCAL’s private equity and venture capital members already have a code of conduct and a number of other specific guidelines, codifying governance principles provides an even more robust and transparent framework for the industry.

“The new Governance Code has been drafted with reference to other corporate governance codes around the world, including the ASX Corporate Governance Principles and Recommendations, to provide assurance to stakeholders that private equity firms are responsible stewards of their investors’ capital and of the businesses they invest in.”

AVCAL members will be obliged to implement the code in a similar manner to the way ASX listed companies are obliged to implement the ASX Corporate Governance Principles and Recommendations, in that, if they elect not to adopt any aspect of the code, they must be in a position to explain why not - the “if not, why not” approach.

Dr Woodthorpe thanked the law firm Blake Dawson who worked closely with AVCAL on the compilation of the Governance Code.

Blake Dawson partner, David McManus, said that in drafting the code, AVCAL had to be aware that its members are drawn from all parts of the Australian private equity industry.

“The Governance Code is a document which has to work for all of AVCAL's members, wherever they operate within the private equity industry. That meant it had to be a principles based code that could be implemented by each private equity firm in light of the particular characteristics of their investments and their stakeholders. By adopting this approach, and by periodically reviewing the Governance Code, AVCAL will ensure that the code remains relevant to its members and a source of assurance to those who deal with the private equity industry.”

The Governance Code is part of AVCAL’s program of continuous development in industry standards, and follows the 2009 call by AVCAL Council encouraging its members to implement ESG (environmental, social and governance) practices such as those outlined by the UN-backed Principles for Responsible Investment (PRI) for Private Equity.

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

Australian PE and VC continue to outperform

January 10, 2012

30 August 2011

Boston, MA, and Sydney, Australia

Continuing the trend seen over the last three quarters, the Cambridge Associates LLC Australia Private Equity and Venture Capital Index outperformed the S&P/ASX 300 Index over the one-, three- and five-year horizons as of the quarter ended March 31, 2011, with annualized returns of 7.7%, 1.5% and 4.8% respectively.

Thanks to the strength of the Australian dollar, the Australian benchmarks are even more impressive in US dollar terms, with one-, three- and five-year annualized returns of 21.3%, 7.5% and 13.0% respectively.

Post-crisis investments in particular have continued to perform strongly. Funds from the 2008 vintage year, as well as Australian investments made in 2009 and 2010, are now registering double-digit IRRs.

“Based upon our analysis we estimate the Australian Private Equity and Venture Capital Index now represents approximately 70% of the dollars raised by institutional-quality Private Equity and Venture Capital firms in Australia, adding credence to the accuracy of the performance data,” said Eugene Snyman, Managing Director at Cambridge Associates’ office in Sydney, Australia.

The Australian Private Equity and Venture Capital Association (AVCAL) CEO Dr Katherine Woodthorpe said: “Private equity and venture capital are not only a high-performing asset class over medium- to longer-term time horizons, but are less volatile than many may think, as the latest index figures attest.”

This is the fourth quarterly report from the Index, which is a result of a strategic partnership between AVCAL and Cambridge Associates, global provider of independent research and investment consulting services.

The response rate from Australian private equity and venture capital managers providing their financial fund data to the benchmark continues to grow, as reflected by the 14% increase in the number of funds in the benchmark from the prior quarter, bringing the total number of funds reporting their data to 66.

CambridgeAssociates LLC Australia Private Equity & Venture Capital Index Returns for the Period ending March 31, 2011

Index (A$)	1-Quarter	1-Year	3-Years	5-Years	10-Years

CambridgeAssociates LLC Australia Private Equity & Venture Capital Index (A$) ¹	1.8	7.7	1.5	4.8	7.8
S&P/ASX 300 Index	3.1	3.8	1.1	3.2	8.9
UBS Australian Composite Bond Index	2.0	6.9	7.4	6.0	5.8
UBS Australia Bank Bill Index	1.2	4.9	5.0	5.7	5.4
S&P/ASX Small Ordinaries Index	(1.2)	13.5	(0.9)	2.8	9.9
Index (US$)
CambridgeAssociates LLC Australia Private Equity & Venture Capital Index (US$) ¹	2.7	21.3	7.5	13.0	15.9

The Cambridge Associates LLC Australia Private Equity & Venture Capital index is an end-to-end calculation based on data compiled from 49 Australia private equity and 17 Australia venture capital funds, including fully liquidated partnerships, formed between 1997 and 2010.

1 Pooled end-to-end return, net of fees, expenses, and carried interest.

Sources: Bloomberg L.P., Cambridge Associates LLC, Standard & Poor's, Thomson Datastream, UBS AG and UBS Global Asset Management.

About Cambridge Associates

Founded in 1973, Cambridge Associates delivers investment consulting, independent research, and performance reporting services, and outsourced portfolio solutions to over 900 institutional investors and private clients worldwide. Cambridge Associates has advised its clients on alternative assets since the 1970s and today serves its clients with more than 200 professionals dedicated to consulting, research, operational due diligence and performance reporting on these asset classes. For more information about Cambridge Associates, please visit www.cambridgeassociates.com.

About AVCAL

AVCAL, the Australian Private Equity and Venture Capital Association Limited, was established in 1992 as a forum and voice for participants in the private equity and venture capital industry. Membership includes almost all the domestic and international PE and VC fund managers active in Australia. PE and VC are key sources of capital for companies of all sizes, to enable their growth and realise their potential. VC is one of the few sources of capital available to enable entrepreneurs to convert innovative ideas into sustainable enterprises. Australian PE has around $22.4b under management while VC has around $2.8b under management. www.avcal.com.au www.twitter.com/avcal1 www.linkedin.com/in/avcal

Media contact:

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

Cambridge Associates - Itay Engelman, Sommerfield Communications, ph +1 212 255 8386, itay@sommerfield.com.

AVCAL welcomes better targeted R&D tax breaks

January 10, 2012

21 June 2011

The Australian Private Equity and Venture Capital Association (AVCAL) welcomes the commitment by the Federal Government to reshape the research and development tax concession framework to better support true R&D in small and medium-sized businesses.

AVCAL CEO Dr Katherine Woodthorpe said: “Tightening up the eligibility requirements for the R&D tax concessions now means that most of the tax breaks will go to genuine R&D initiatives rather than some of the ‘business as usual’ programs of big business.

“Innovation sits at the core of Australian enterprise. Venture capital is a key source of funding for Australian innovators. Our industry members and the companies they invest in see research and development as a vital and fundamental component of their businesses.

“R&D is time consuming and expensive but is essential to ongoing innovation and success in business. The Australian venture capital industry funds many of the businesses that lack the capacity to obtain traditional sources of capital. This new tax measure is an important acknowledgment of the true value that innovation and genuine R&D bring to our national economy and wellbeing.”

Businesses that genuinely use R&D as an investment for future growth will be able to benefit from access to a 45 per cent refundable tax credit (to companies with an aggregated turnover of less than $20 million) and a 40 per cent non-refundable offset (to all others).

These benefits will be delivered in quarterly payments to small and medium businesses from 1 January 2014. AVCAL is pleased to see the key recommendations contained in its submission earlier this year to the Government’s first exposure draft of the Tax Laws Amendment (Research and Development) Bill 2010 have been accepted in the proposed legislation.

The R&D tax credit was announced as part of the Governments Innovation Agenda, ‘Powering Ideas – An Innovative Agenda for the 21st Century.’ The R&D tax credit will deliver $1.8b annually benefitting over 5,500 small businesses.

Foreign companies holding IP overseas, conducting their R&D in Australia may also be eligible to apply for the R&D tax credit. AVCAL looks forward to the new tax measures for R&D becoming law once the legislation passes the Senate sometime after July.

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

Private equity backed IPOs superior for shareholders

January 10, 2012

22 June 2011

A statistical analysis of initial public offerings (IPOs) shows that private equity backed IPOs have historically recorded higher average returns than non-private equity backed listings.

The study by the Australian Private Equity and Venture Capital Association (AVCAL) found that newly listed shares by private equity (PE) firms outperformed non-PE backed listings across all time horizons analysed from one day to three years after IPO listing, with average returns ranging from 4 per cent to 78 per cent across the different time scales compared to minus 2 per cent to 4 per cent for non-PE backed IPOs.

The results also showed that PE-backed IPOs’ outperformance tended to increase over time. The average share price of PE-backed stocks grew by 1.78 times over a three year period after listing compared to non-PE stocks which averaged 0.98 times their listing price. PE backed IPO average share prices were also higher after one day, one week, six months, one year and two years post listing.

AVCAL CEO Dr Katherine Woodthorpe said that the research disproves the notion that PE backed IPOs consistently underperform compared to non-PE backed stocks.

“There has been a misguided view in some quarters that private equity investment doesn’t have a long term benefit to investors beyond the PE ownership period,” she said.

“This study clearly demonstrates that PE backed IPOs brought superior returns on average than non-PE backed IPOs even up to three years after listing. In fact, PE backed IPOs outperformed more, on average, over longer time horizons.”

Dr Woodthorpe said PE backed companies have cited factors such as rigorous strategic oversight and governance, speed of decision making and the freedom for senior management to concentrate on operational performance as some of the key benefits of PE ownership.

“Private equity develops governance systems and processes within companies to prepare them for the rigours they face entering a public market environment. These factors become culturally embedded in the organisations and are to the benefit of subsequent owners.”

The study, ‘An analysis of the performance of private equity-backed IPOs in Australia’, was peer-reviewed to validate the research methodology and findings.

The study analysed all IPOs valued at $100m and above from 23 October 2003 to 8 Nov 2010. This period included 14 PE backed IPOs and 88 non-PE backed IPOs.

To validate the robustness of the results, alternative time periods were analysed, as well as the possible distortionary effects of a small number of extreme performers on the average returns. The study also used various weighting, index and sector-matching measures to obtain more balanced comparisons.

For example, the analysis included the construction of weighted indices to compare the concurrent performances of PE and non-PE-backed IPOs over time.

Over the seven-year period, the PE-backed index more than tripled from the base figure of 1,000 to 3,386 while the non-PE IPO index rose to 2,099. Both indices outperformed the S&P/ASX 200 Accumulation Index market benchmark which rose to 1,985 over the same period.

This analysis was also repeated using only the industry sectors which had both PE and non-PE IPOs, resulting in an even greater outperformance by PE backed IPOs. Over the entire seven-year period of the study, PE IPOs generated a compound annual growth rate of 19.03 per cent compared to just 0.52 per cent for non-PE IPOs

Click here for the report.

Examples of PE-Backed IPOs

For case studies of various PE-backed IPOs such as Seek and Bradken, please see the AVCAL publication ‘Value capital – the evolution of venture capital and private equity in Australia’.

Media contact

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

AVCAL awards recognise performance

January 10, 2012

15 June 2011

AVCAL, the Australian Private Equity and Venture Capital Association, is calling for nominations for its 2011 Awards that recognise outstanding performance across a range of categories.

AVCAL CEO Dr Katherine Woodthorpe said the role of private equity (PE) and venture capital (VC) participants in helping smaller and medium-sized companies grow and in funding and guiding start-up companies to develop new products and services is not well understood.

“There are so many success stories of companies that have been backed by private equity and venture capital funds and the AVCAL Awards are one measure to recognise the important work being done by this industry,” she said.

“Many small businesses and entrepreneurial ventures with potential find it difficult to obtain funding and the PE and VC industry looks to take on this sort of risk where others traditionally will not.”

A panel of industry experts will assess nominations from AVCAL members across two award categories: portfolio company awards and the excellence in investor reporting award.

The portfolio company awards recognise vision, achievement, creativity and entrepreneurship of AVCAL fund manager members, who are collectively responsible for $31 billion of funds under management. The categories for these awards are for investments in early stage, expansion stage, small buy-out, medium buy-out and large buy-out. Judging criteria will be 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 recognises fund managers for their excellence in reporting by assessing their adherence to the AVCAL reporting guidelines to exceed investor expectation and other attributes such as clarity and depth of information. This award aims to promote a continual lifting of reporting standards as well as the benchmarks by which the industry is measured.

Award winners will be announced at the AVCAL 2011 Annual Conference in September.

Media contact

Stuart Snell, Communications Manager, Ph +61 (0)2 8243 7001, (0)416 650 906, stuart.snell@avcal.com.au

Australia PE and VC Generated Attractive Returns

January 10, 2012

14 June 2011

Boston, MA, and Sydney, Australia

Australian private equity and venture capital continued to generate attractive returns over one-, three- and five-year periods as of the year ended December 31, 2010, when compared with the S&P/ASX 300 Index.

Performance for the same periods was mixed when compared with the S&P/ASX Small Ordinaries Index, which performed stronger over the one-year period, according to the Cambridge Associates LLC Australia Private Equity and Venture Capital Index.

“Despite its relative underperformance during the fourth quarter of 2010, the Index performed favourably over the medium- to longer-term, when compared against the domestic public market and domestic bond market indices,” said Eugene Snyman, Managing Director at Cambridge Associates’ office in Sydney, Australia.

The Australian Private Equity and Venture capital Association (AVCAL) CEO Dr. Katherine Woodthorpe said: “Australian PE has consistently outperformed over the one- to five-year horizons, since the second quarter of 2010, when the Index commenced, to this most recent report.

“It is also encouraging to see that funds raised in 2008, during the height of the global financial crisis, are already reporting strong interim performance numbers. However, it remains to be seen how the evolving economic and regulatory climate will impact fundraising, investment and divestment activity going forward.”

The response rate from Australian private equity and venture capital managers providing their financial fund data to the benchmark continues to grow, as reflected by the almost 10% increase in the number of funds in the benchmark from the prior quarter, bringing the total number of funds reporting their data to 58.

Cambridge Associates LLC Australia Private Equity & Venture Capital Index Returns for the Period ending December 31, 2010

Index (A$)	1-Quarter	1-Year	3-Years	5-Years	10-Years

CambridgeAssociates LLC Australia Private Equity & Venture Capital Index (A$) ¹	(1.2)	7.3	0.6	5.7	8.3
S&P/ASX 300 Index	4.7	1.9	(5.0)	4.4	8.5
UBS Australian Composite Bond Index	(0.2)	6.0	7.4	5.8	5.9
UBS Australia Bank Bill Index	1.2	4.7	5.2	5.7	5.5
S&P/ASX Small Ordinaries Index	11.2	13.1	(5.9)	5.5	9.3

The Cambridge Associates LLC Australia Private Equity & Venture Capital index is an end-to-end calculation based on data compiled from 41 Australia private equity and 17 Australia venture capital funds, including fully liquidated partnerships, formed between 1997 and 2010. 1Pooled end-to-end return, net of fees, expenses, and carried interest. Sources: Bloomberg L.P., Cambridge Associates LLC, Standard & Poor's, Thomson Datastream, UBS AG and UBS Global Asset Management.

This is the third quarterly report from the Index, which is a result of a strategic partnership between AVCAL and Cambridge Associates, global provider of independent research and investment consulting services. The response rate from Australian private equity and venture capital managers providing their financial fund data to the benchmark continues to grow, as reflected by the almost 10% increase in the number of funds in the benchmark from the prior quarter, bringing the total number of funds reporting their data to 58.

About Cambridge Associates

Founded in 1973, Cambridge Associates delivers investment consulting, independent research, and performance reporting services, and outsourced portfolio solutions to over 900 institutional investors and private clients worldwide. Cambridge Associates has advised its clients on alternative assets since the 1970s and today serves its clients with more than 180 professionals dedicated to consulting, research, operational due diligence and performance reporting on these asset classes. For more information about Cambridge Associates, please visit www.cambridgeassociates.com.

About AVCAL

The Australian Private Equity & Venture Capital Association Limited (“AVCAL”) is a national association which represents the private equity (“PE”) and venture capital (“VC”) industries. AVCAL's members comprise most of the active private equity and venture capital firms in Australia. These firms provide capital for early stage companies, later stage expansion capital, and capital for management buyouts of established companies. www.avcal.com.au.

Media contact:

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

Cambridge Associates - Itay Engelman, Sommerfield Communications, ph +1 212 255 8386, itay@sommerfield.com.

AVCAL opens research prizes for 2011

January 10, 2012

10 June 2011

The Australian Private Equity and Venture Capital Association (AVCAL) is calling for submissions for two research prizes in a bid to promote high-quality and rigorous analysis of the private equity and venture capital industry in Australia.

AVCAL CEO Dr Katherine Woodthorpe said: “AVCAL started the prizes last year to encourage the development of high-quality research on issues of importance and relevance to the Australian private equity and venture capital industry.

“The aim is to increase knowledge and understanding of the industry through the publication of pertinent articles in the scholarly press, and we had such a fantastic response last year we decided to keep the prizes going.”

Submissions are invited from academia and industry participants for two prizes:

AVCAL Private Equity Research Prize: A$2,500 will be awarded for the best paper on private equity
AVCAL Venture Capital Research Prize: A$2,500 will be awarded for the best paper on venture capital.

AVCAL Research Manager Dr Kar Mei Tang said private equity and venture capital are often not well understood by the general public because of the shortage of objective, evidence-based research on the industry.

"Being able to help promote and generate further analysis of the PE and VC industry is important to help foster greater awareness of the economic role our industry plays,” she said. “An example is the fact that the majority of private equity and venture capital investments are actually in small and medium-sized Australian enterprises looking for non-bank capital to expand further. Many people do not realise how PE and VC help fund and develop dynamic companies, services and products."

Criteria for the prizes include the provision of new and useful insights into PE and VC. This may include empirical studies on the economic effects of PE and VC investment, case studies, or other study aspects such as the effects of PE and VC ownership on growth and innovation in investee companies, and the impact of public policies on VC financing and commercialisation.

Further information is available from the AVCAL website.

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

AVCAL welcomes government innovation support

January 10, 2012

9 June 2011

The Australian Private Equity and Venture Capital Association (AVCAL) welcomes the independent evaluation of the Commonwealth Government’s Innovation Investment Fund (IIF) program and the government’s support for an ongoing commitment to a “national innovation system”.

AVCAL CEO Dr Katherine Woodthorpe said government support for early stage and start-up businesses with innovative ideas is crucial for Australia, in order to grow entrepreneurial and venture capital successes such as Seek, LookSmart and numerous medical companies.

“Without the IIF enabling equity investments to younger and smaller companies in Australia, we would not have had some of the successful new companies now operating in the technology and medical fields,” she said.

Dr Woodthorpe said the two IIF assessment reports released this week by the Government found the IIF program filled a funding gap and then led to subsequent funding for those firms by private sources of capital , thus promoting a cycle of “follow-on financing” independent of the program.

“I applaud Innovation Minister Senator Kim Carr’s acknowledgement that an innovation fund ‘is essential’ and look forward to further policy discussion around how to achieve this with the final round of IIF program money being allocated this year,” she said.

“Unfortunately there has been no indication of on-going support once the IIF program concludes this year.”

The IIF was designed to promote and support the development of young enterprises in the Australian economy and to help in the parallel development and establishment of a venture capital industry. Today, the Minister announced the recipients of the latest round of IIF funding.

The independent assessment “has found that the rationale for the three rounds of financing for the IIF program remains valid”. However, there is uncertainty surrounding the future of the program after the current funding round is fully disbursed.

To date the IIF program has enabled a pool of $524 million of government and private capital to invest in over 100 promising early-stage companies since 1997. Other IIF successes include the respiratory diseases drug maker Pharmaxis, therapeutic product manufacturer Alchemia, pain management drug maker QRxPharma, online mortgage broker eChoice, and mining services company Gekko Systems.

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