Australian Private Equity & Venture Capital Journal // September 2014

SEPTEMBER 2014 · Year 22 No 245

$336m frequent flyer deal ready for takeoff

Radiology sector attracts new growth investment

Post escrow shares sale returns $579m Image: A Custom city bus

Story page 6

Australian Private Equity & Venture Capital Journal SEPTEMBER 2014 · Year 22 No 245 | 2

CONTENTS

EDITOR’S LETTER

Sovereign funds see value in PE 3

PERFORMANCE

Post escrow shares sale returns

$579m 5

Syndicate partially exits New

Zealand glass manufacturer 6

$150m raised in satellite

communications float 6

Lower mid-market firm exits New

Zealand bus operator 8

Private equity outperforms listed

equities over latest year 10

Listed manager doubles assets under

management 13

Life sciences venture firm exits

US investment 16

Range of alternatives return 14.8

per cent over eight years 16

INVESTEE NEWS

Poultry business rationalisation

underway 12

Plant virus protection attracts global

agri-business 14

US media executives mentor Sydney

start-up 17

Wireless charging test offered to

electronic device makers 17

PEOPLE MOVES

Global buyout firm recruits locally for

Indonesia push 13

Placement agent swaps London for

Hong Kong 15

NEW FUNDS & FUNDRAISING

New Zealand-Taiwan fund achieves

$NZ88m first close 8

Global manager offers discounts on

management fees 11

Asian region fund approaching target 14

Listed alternatives fund makes large

allocation to water 14

NEWS

$US100bn fund to allocate up to

15 per cent to private equity 8

City may offer share in $NZ2bn

commercial assets 15

‘Company to watch’ acquired for

$80m 17

INVESTMENT ACTIVITY

$336m frequent flyer deal ready

for takeoff 4

Radiology sector attracts new

growth investment 4

Second bidder emerges for wine

company 5

Turnaround firm in bus body builder

restructure 6

Local venture firm leads $US6m

funding round in Israel 10

Global firm to make first real estate

investment in Australia 12

Further $8.7m for data centre

monitoring technology 12

Growth fund takes stake in beauty

treatments business 12

Corporate venturer invests in data

collection business 13

$1m funding for development of

new products 13

Healthcare company in $3.6m capital

raising 15

INFORMAL VENTURE CAPITAL

Jet pack raising reaches $NZ3m 15

CONFERENCES & ROUNDTABLES

Investors to examine strategies

at start-up event 17

COMING EVENTS

Coming Events 26

ShARES ChART

Shares Chart 27

FEATURES

LOCAL RETAIL SECTOR HAS GLOBAL APPEAL 19

UK BACKS HIGH TECH TO LEAD RECOVERY 22

REARVIEW MIRROR 24


AUSTRALIAN PRIVATE EQUITY & VENTURE CAPITAL JOURNAL

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Odette Boulton

Australian Private Equity &

Venture Capital Journal is an

Independent publication. The

Journal welcomes editorial

contributions. All opinions are

those of the authors. All material

copyright Australian Private

Equity & Venture Capital Journal

and individual authors.

ISSN number: 1038–4324

EDITOR’S LETTER

The MySuper changes have driven

super funds to focus on cost reduction

with the result that private equity and

venture capital have been labelled as “high

fee” investments.

But what about returns net of fees? Super

funds have varying views of our industry

in this context. Some don’t see value in a

sector which requires long term commitment

yet is closely correlated to listed equities.

Others say they have tried it and it hasn’t

worked for them. A smaller number, but

including some of the largest, say they

make small allocations to private equity but

recognise it as important to boost long-

term returns.

Asset advisers generally agree that is

why private equity should be part of an

institutional investment, but only a small

part, say up to 5 per cent.

The Future Fund, however, places greater

importance on private equity. It now has

close to 8 per cent invested in the sector.

These investments include a couple of local

fund managers but are mainly with global

fund-of-funds and buyout managers.

Another sovereign wealth fund,

Singapore’s GIC Private (GIC), has even more

invested in private equity – 9 per cent – and

it is planning to increase that to as much as

15 per cent over time.

GIC says private equity investment enables

it to achieve better long-term returns

on its overall portfolio because private

equity offers the highest expected return –

although with the highest risk – among the

major asset classes.

Performance of individual private equity

deals can vary greatly, GIC says. Similar to

other asset classes, performance of private

equity can be impacted by global conditions

such as the 2008-09 global financial crisis,

although even in challenging years some

investments do well compensating for those

that underperform.

The higher returns of private equity are, in

part, compensation to investors for assuming

illiquidity risk. Underlying investments are

typically held for three years or longer and

private equity fund investments are difficult

to divest at short notice.

GIC says that as a long-term investor it can

afford to ride through private equity’s higher

volatility in expectation of higher long-term

returns.

So how has private equity performed

for GIC? Since it began investing in the

asset class in 1982, GIC’s private equity

investments have out-performed listed

equities.

The strategy? The bulk of GIC’s

investments are in developed markets

particularly in North America and Europe

and to a lesser degree in the Asian

region but it also has a substantial

presence in emerging markets particularly

in Asia.

GIC invests both via funds and directly

into companies, investing globally in

each strategy. In all, it has relationships

with about 100 private equity fund

managers and has about the same number

of direct investments either alongside its

fund managers or independently.

GIC invests across multiple industry

sectors but focuses on financial

services, business services, consumer

goods, healthcare, technology, media,

telecommunications and natural resources.

The sovereign wealth fund seeks to

invest only in top quartile fund managers

but also provides seed funding to promising

new funds.

Perseverance is clearly the key to success.

ADRIAN HERBERTManaging Editor, Australian Private Equity & Venture Capital Journal

SOVEREIGN FUNDS SEE VALUE IN PE


INVESTMENT ACTIVITY$336M FREqUENT FLYER DEAL READY FOR TAKEOFF

Affinity Equity Partners is to acquire a 35

per cent stake in Virgin Australia’s frequent

flyer programme for $336 million.

Announcing the deal on 29 August,

Virgin Australia Holdings (ASX: VAH)

said the transaction was intended “to

accelerate the growth of Velocity Frequent

Flyer and fast track its strategy to

become one of the world’s leading loyalty

programmes”.

A separate Velocity board is to be set up

with Virgin appointing the chairman and

having majority representation. Virgin said

it planned to maintain its majority holding

in Velocity.

The transaction is to be brought into

effect by Affinity purchasing Australian

dollar denominated convertible notes in a

Virgin Australia Group company. The notes

will convert after five years, immediately

prior to an exit by Affinity, on a change of

control event affecting the issuer of the

notes (excluding a change of control at

Virgin Australia level) or by mutual consent.

Affinity Australia and New Zealand head

Brett Sutton said Velocity Frequent Flyer

was one of Australia’s largest and most

successful loyalty programs.

“Velocity Frequent Flyer embodies

all of the key traits we look for in an

investment – a solid base business, strong

management and significant growth

prospects. Through this investment,

together with Virgin Australia, we hope to

rapidly grow the program and drive further

value in return.”

Virgin chief executive John Borghetti

said: “Affinity brings a wealth of experience

in driving rapid and sustainable growth

across a diverse range of businesses and

we look forward to working with them to

enhance value.”

The Velocity Frequent Flyer scheme has

been operating in Australia for nine years

and claims the widest retail offering of any

Australian programme. Recently added

brands include Starwood Hotel Group,

Australia Post and Aussie Home Loans.

The Qantas frequent flyer scheme has

frequently been mooted as a potential

private equity target but Qantas has said it

is not interested in selling.

Both Virgin Australia and Qantas

reported substantial losses in their annual

financial statements last month (August).

Asia Pacific regional private equity firm

Affinity has about $US8 billion in assets

under management. The firm has had

a Sydney office since it was formed in

2004. Current Affinity investments include

smallgoods manufacturer Primo Group

in Australia and poultry producer Tegel

Foods in New Zealand.

INVESTMENT ACTIVITYRADIOLOGY SECTOR ATTRACTS NEW GROWTH INVESTMENT

Lower mid-market firm Advent Private

Capital has invested in the merger of

two large regional diagnostic imaging

businesses.

Merging Victoria-based Lake Imaging and

Queensland-based South Coast Radiology

will create Australia’s fourth largest business

in the radiology services sector.

Advent is believed to have committed

up to $50 million for a stake of around 35

per cent.

The deal follows European private equity

firm EQT acquiring Australia’s largest

radiology business I-MED Network for

$500 million in February (APE&VCJ, Mar 13).

Advent has taken a minority stake in

Lake Imaging alongside radiologists who

run the practices and Lake’s management

team, all of who have medical

backgrounds. The practices will continue

to operate under the Lake Imaging and

South Coast Radiology names.

Advent executive director Mark Jago

said: “Diagnostic imaging is a critical

and central part of quality healthcare

with sector growth exceeding 8 per

cent per annum over the last five years.

The combined group will have revenue

of about $150 million with over 50

radiologists and 600 employees operating

across four states.”

Advent was comfortable with being a

minority stakeholder alongside radiologists

who had built up individual practices,

Jago said. Historically, at least 50 per

cent of Advent’s deals had been minority

investments, it had started out as a

provider of development capital and it

had extensive experience in the healthcare

sector. The most recent health care

investment had been Genesis Care which

had been successfully exited to Kohlberg

Kravis Roberts (KKR) in 2012 (APE&VCJ,

Jul 12).

Jago said merging the two businesses

had not required structural rationalisation

as Lake Imaging had a dedicated

management team whereas management

of South Coast was decentralised.

Profitability would be improved primarily

by the Lake management team focusing

on upgrading services and improving

efficiency across all practices. Medicare

benefit schedules capped rates for most

services but the volume of demand was

growing and included increasing demand

for more expensive services which

required specialised equipment such as

MRI and CAT scanners. A larger and better

financed business would able to provide

these services more efficiently and should

be able to achieve benefits of scale in

purchasing. Improved financing would also

enable the business to better compete for

work such as servicing private hospital

networks.

Jago said he expected the business

would continue to focus on regional

centres where there was ample

opportunity for expansion and he did

not see acquisitions as important in that

growth. Lake’s recent acquisition of a

majority stake in West Australian business

Global Diagnostics Australia (GDA)

had already opened up a new front for

expansion.

GDA is a leading provider of diagnostic

imaging and tele-radiology services to the

Western Australia Country Health Service,

private medical facilities, public hospitals,

community centres and standalone clinics

in the state. Some of the private hospital

groups it services also have facilities in

Victoria.

Lake Imaging is Victoria’s largest

independent radiology group. The

business was founded in 2002 when it

acquired its first radiology practice in

Ballarat and it has since grown steadily

through acquisitions and opening new

practices.

South Coast Radiology is Queensland’s

largest independent radiology group.

The business has most of its practices

on the Gold coast but also has practices

in Queensland regional centres and in

northern NSW.


Group chief executive of Lake,

John Livingston, said radiologists

and management were pleased to be

partnering with Advent in the merger.

“They have deep experience in healthcare

and a solid reputation in partnering. We

remain unique in the healthcare sector with

radiologists continuing to hold the majority

of shares and having responsibility for all

local clinical matters,” he said.

Advent managing director Robert

Radcliffe-Smith said he expected the

acquisition to continue Advent’s highly

successful track record in investing in

healthcare. Primary Healthcare, Benchmark

Hospital Group and Cochlear had preceded

GenesisCare.

The Lake Imaging investment is the third

for the $200 million Advent 6 Fund which

closed in June 2013.

PERFORMANCEPOST ESCROW SHARES SALE RETURNS $579M

Pacific Equity Partners has sold down

its stake in Veda (ASX: VED) to return

$579.317 million.

With escrow of its stake ending with

Veda issuing its 2014 financial year results,

PEP sold 269.45 million shares at $2.15 a

share on 28 August.

PEP retained about 265.068 million

shares representing a stake of 31.5 per cent.

As the holder of a 30 per cent or larger

stake, PEP retains the right to nominate

two directors to the board of Veda.

Veda’s results for the 2014 financial year

exceeded its November 2013 prospectus

forecasts with profit well above the

previous year.

Operating earnings before interest, tax,

depreciation and amortisation (EBITDA)

were up 21.7 per cent, from $105.5 to $128.4

on revenue up 12.4 per cent from $268.6

million to $302 million.

INVESTMENT ACTIVITYSECOND BIDDER EMERGES FOR WINE COMPANY

Kohlberg Kravis Roberts (KKR) and Rhône

Capital’s joint $3.4 billion bid for Treasury

Wine Estates (ASX: TWE) is now facing

competition.


Treasury announced on 11 August that it

had received an additional bid and it has

since been rumoured since that a third bid

may be made.

Neither of these parties has been

identified but the bid reported by Treasury

is believed to have been made by TPG

Capital and the most likely other interested

party would be Carlyle Group.

The bid reported by Treasury matches

KKR’s offer for all the company’s shares at

$5.20 per share cash by way of a scheme of

arrangement.

Treasury said the bidder was “another

global private equity investor” which

had requested that its identity remain

confidential for a period of time.

Treasury reiterated that if a proposal

resulted after due diligence its board would

assess whether this offered better value

than management’s current turnaround

strategy (APE&VCJ, Aug 14).

The stockmarket was underwhelmed

by signs of an auction developing, with

investors no doubt noting that there was no

advance on price. After the announcement

of the second bid, Treasury shares briefly

hit a new high for the year of $5.26 before

slipping back to around the offer price and

then slipping further. The shares closed at

$5.11 on 29 August.

PERFORMANCESYNDICATE PARTIALLY ExITS NEW ZEALAND GLASS MANUFACTURER

A syndicate led by Crescent Capital

partially exited New Zealand glass

manufacturer Metro Performance

Glass (NZX: MPG) in the company’s

$NZ244.2 million IPO and NZX float on

30 July.

The company also floated a secondary

stake on the ASX (ASX: MPP).

The syndicate, which also includes AIO

Finance (Ireland) Limited, JP Morgan

Special Opportunities, Portigon AG, Bain

Capital’s credit affiliate Sankay Capital

Advisors and Deutsche Bank AG, received

a return of about $NZ230 million from

the float in which they reduced their joint

holding to 18.5 per cent. Management

holds 3.8 per cent.

The Crescent syndicate and

management are to retain their shares

under voluntary escrow until Metro

announces its results for the half year to

the end of September 2015.

Metro shares were issued at $NZ1.70

and closed the first day up 3.5 per cent

at $NZ1.76 giving the company a market

capitalisation of $NZ326.5 million.

The ASX shares closed at $1.565 on 29

August.

Joint lead managers of the offer were

Forsyth Barr, Macquarie Securities NZ and

UBS New Zealand.

The Crescent-led consortium acquired

the company, then know as Metro

GlassTech, for $NZ181.5 million in a debt for

equity swap in early 2012 (APE&VCJ, Apr 12).

The business, which had been owned

by Catalyst Investment Managers and

Macquarie Investment Management, had

breached debt covenants and been taken

under control by creditors after being hit

by a 40 per cent decline in its sales of

glass for residential building construction.

Speaking after the float, Metro chief

executive Nigel Rigby, who was appointed

by Crescent, said the private equity and

debt investors had provided a capital

injection of $NZ40 million to stabilise the

company.

Metro produces more than two million

square metres of glass annually and has

about a 50 per cent share of the New

Zealand market. The company is currently

developing a $NZ21 million new production

facility in South Auckland.

PERFORMANCE$150M RAISED IN SATELLITE COMMUNICATIONS FLOAT

An IPO and ASX float of TA Associates

investee SpeedCast International has raised

$150 million.

Hong Kong-based SpeedCast is an

international satellite telecommunications

company with a strong Asia-Pacific region

focus.

A total of 76.5 million shares were issued

in the IPO at $1.96.

A total of 120.2 million shares were on

issue at the completion of the offer with TA

Associates retaining 29.5 million (24.6 per

cent) to remain the largest shareholder.

About $98 million of the raising

was to go to TA Associates and other

selling shareholders and to partly repay

SpeedCast’s debt.

SpeedCast was listed on the ASX on 12

August (ASX: SDA) with its shares closing

the day up 7.1 per cent at $2.10. This gave

the company a market capitalisation of

$252.42 million.

TA Associates plus management and

director shareholders, who jointly hold 11.7

per cent of the company, have entered

into voluntary escrow arrangements not to

dispose of their shares, apart from limited

exceptions, until after the release of the

company’s results for the six months to the

end of June 2015.

Boston-based TA Associates acquired

SpeedCast in September 2012. In December

that year it acquired a similar sized business

in Australia, Adelaide-based Australian

Satellite Communications which it merged

with SpeedCast. In January 2013, SpeedCast

acquired Netherlands-based Elektrikom

Satellite Services and later that year TA

Associates and SpeedCast jointly acquired

Sydney-based satellite communications

company Pactel International (APE&VCJ,

Jun 13).

SpeedCast generates 35 per cent of its

revenue from Australia and 50 per cent

from the Asia-Pacific region. More than 40

per cent of the staff are Australia based.

Chief executive Pierre-Jean Beylier

said SpeedCast expected to continue

making acquisitions in an industry ripe for

consolidation.

SpeedCast’s shares were trading around

$2 on 29 August.

INVESTMENT ACTIVITYTURNAROUND FIRM IN BUS BUILDER RESTRUCTURE

Turnaround specialist private equity

firm Allegro Funds is part of a consortium

that has bought out of administration

the business and assets of bus-body

building company Custom Coaches

Pty Ltd.

The consortium is led by former owner

and managing director of Custom, Mark

Burgess, whose family established the

business in 1955.

New entity Custom Bus Australia Pty

Ltd will now continue building buses at

Villawood in western Sydney. A second

manufacturing facility at Royal Park,

Adelaide, was closed while Custom

Coaches was in administration.


Australia’s second largest bus-body

building company, Custom Coaches had

been placed in voluntary administration

under Deloitte at the end of May.

Following a sharp decline in new

orders, UK owners Alexander Dennis had

decided not to continue supporting the

business. Britain’s largest bus body builder,

Alexander Dennis had acquired Custom

Coaches from Burgess family interests only

in June 2012.

The business is currently at the end

of a contract to build buses for the NSW

State Transit Authority and also has a

contract to supply buses to the South

Australia departments of transport and

education.

Custom Coaches built more than 220

buses in 2013 accounting for about 15 per

cent of the Australian market.

The sale of the business has saved

about 120 jobs but this represents a

substantial scaling back from around 300

employees before Custom Coaches went

into administration. Around 100 jobs have

been lost in Sydney and around 60 in

Adelaide.

A small number of Adelaide employees

have been retained with the new owners

planning to establish a customer after-care

facility at a new site in South Australia.

Burgess said: “This is a great step

forward for Custom which transitions to a

new and stable Australian ownership with

no debt, strong cash reserves and a highly

experienced management team backed

by institutional investors. We look forward

to a bright future with our customers,

suppliers and staff.”

Allegro founding partner Adrian Loader

has been appointed chairman of Custom

Bus Australia.

“We see tremendous potential in Custom

and we are pleased that we were able to

transact quickly in a distressed situation to

ensure this business can continue building

the best buses in Australia,” he said.

Loader said the business was now debt

free and had the benefit of stable financial

backing and focused management.

He said Custom Bus would focus on its

key market, building high quality 25-year

lifespan city buses. The company had been

promised support in this from suppliers

and customers.

Allegro’s investment thesis was based on

expected growing demand for city buses

as more public transport was provided

plus legislation requiring larger numbers of

buses to be provided with disability access

and for rural school buses to be made

safer with seat belts fitted.

Loader said the bus market in Australia

was split between purpose built 25-year

lifespan vehicles specified in government

contracts and much cheaper coach-style

vehicles which had life spans of about

seven-and-a-half years. These vehicles,

many of which were fully imported, were

unsuitable for city bus routes as their

passenger compartments were above

luggage storage areas and could only be

accessed via steps.

Australia’s largest bus body builder is

Dandenong-based Volgren which also has

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construction facilities in Queensland and

Western Australia. Volgren was acquired

by Brazilian bus builder Marcopolo in

December 2011.

NEWS$US100BN FUND TO ALLOCATE UP TO 15 PER CENT TO PRIVATE EqUITY

Singapore’s $US100 billion plus sovereign

wealth fund GIC is now targeting an

allocation of 11-15 per cent to private equity.

Actual exposure to private equity

increased from 8 per cent at the end of the

2013 financial year to 9 per cent at the end

of the 2014 financial year.

Releasing the fund’s annual report

for the year to March 2014, group chief

investment officer Lim Chow Kiat said:

“These are challenging times for all

investors including GIC. Asset yields are

low and all major asset classes are facing

potentially low future returns. We continue

to strive for a steady long term real rate of

return by focusing on price discipline as

our investment teams originate, structure

and pursue investment opportunities

across asset classes and across the capital

structure.”

He said GIC had implemented a new

investment framework in April 2013 which

allocates capital to assets and investment

strategies based on opportunity cost.

Clearly, the potential returns from private

equity and venture capital are seen as

worth the higher management costs.

According to the annual report,

GIC achieved a real annualised rate of

return of 4.1 per cent per year in the

20 years to 31 March 2014. That translates

to 6.5 per cent in US dollar nominal terms.

Also in US dollar nominal terms, GIC

achieved annualised returns of 7 per cent

over 10 years and 12.4 per cent over

five years.

PERFORMANCELOWER MID-MARKET FIRM ExITS NEW ZEALAND BUS OPERATOR

Next Capital has exited its investment in

New Zealand bus operator Go Bus with the

sale of the business to the country’s two

largest Maori investment trusts.

Ngai Tahu Holdings Corporation and

Tainui Group Holdings announced on 12

August that they had acquired Go Bus.

Ngai Tahu will hold two thirds of the

business and Tainui the remaining third.

No value for the transaction was released

but S&P Capital IQ reported the sale price

as $NZ170 million.

Loan funding for the deal has been

provided by Westpac.

Hamilton-based Go Bus is one of New

Zealand’s largest bus operators with

operations from Auckland to Invercargill.

Ngai Tahu Holdings chief executive

Mike Sang said: “Go Bus is the type

of investment we seek – it’s a well-run

business in a sector we are comfortable

with and is led by an excellent team.

Go Bus will enable us to further grow

and diversify our portfolio in a way that

is complementary to the rest of our

investments.”

Tainui chief executive Mike Pohio said

Go Bus offered his trust investment

diversification and growth potential.

Reuters quoted Pohio as saying: “We

look for businesses that are well run,

have an ability to grow and have strong

underpinnings.”

Go Bus chief executive Calum Haslop

said the company welcomed the two

investment trusts as sophisticated long-

term investors.

In February Ngai Tahu and Tainui Group

invested alongside Auckland-based private

equity firm Pioneer Capital in its acquisition

of a majority stake in Waikato Milking

Systems Ltd. Waikato is the country’s

leading dairy equipment maker.

The two investment trusts were also

recently part of an unsuccessful bid for the

New Zealand waste management business

of Transpacific Industries (ASX: TPI) which

was sold to Beijing Capital Group.

Ngai Tahu and Tainui, which respectively

represent South Island and North Island

tribes, have worked together under a co-

investment agreement since 2007. They

invest funds flowing from hundreds of

millions of dollar in cash and land titles

granted by the New Zealand Government

in the 1990s to settle historic land

grievances. Together they now have funds

under management of more than $NZ2

billion.

Pohio said: “We’re looking for partners

to further our growth and private equity is

an avenue, although they have a tendency

to a short-term approach and that doesn’t

necessarily align with us and our longer-

term horizon.”

Sydney-based lower mid-market private

equity firm Next Capital invested in Go Bus

in mid-2012 (APE&VCJ, Jun 12), buying out

the stake of New Zealand private equity

firm Direct Capital. No financial details of

that transaction were revealed although

Direct Capital said at the time that it had

sold at a profit.

NEW FUNDS & FUNDRAISINGNEW ZEALAND-TAIWAN FUND ACHIEVES $NZ88M FIRST CLOSE

The first venture capital fund sponsored

by the New Zealand Venture Investment

Fund (NZVIF) and its Taiwan counterpart

the Taiwan National Development Fund has

reached a $NZ88 million first close.

Taiwan-based GRC Managers is targeting

a final close of $NZ118 million ($US100

million) for the GRC SinoGreen Fund III.

NZVIF has committed $NZ26.6 million.

The fund is to be managed by a team of

experienced venture capitalists including

Tony Bishop and colleagues at the former

Pan Pacific Capital, now the Auckland

branch of GRC Managers.

NZVIF chief executive Franceska Banga

said, with the first close now achieved,

GRC Managers was able to start assessing

investment opportunities.

“The terms of NZVIF’s commitment

means that at least $US35 million will be

invested into New Zealand originating

technology companies,” she said. “Tony

Bishop and two others will be based in

Auckland and looking at opportunities.

“If the fund reaches its $US100 million

target it will be one of the larger venture

capital funds supported by NZVIF. That

gives it the capacity to make the larger

investments which are needed for growing

companies looking at offshore expansion.

“With its solid interest in New Zealand

originating companies, this will be an

important fund for the growth stage

investment sector. GRC Managers has

strong networks and access in the

technology sectors including a direct

relationship with the Industrial Technology

Research Institute in Hsinchu, which has

played a major role in the development


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Award categories are:• Growth Company of the Year • Growth Company CEO of the Year • Exit of the Year• Growth company to watch.

Nominations close on the 15th September 2014.The award winnders will be announced on 16 October 2014.

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of Taiwan’s hi-tech sector, and research

facilities in China.

“GRC Managers have been interested

in New Zealand for some time and last

year joined a delegation of venture capital

funds who visited New Zealand to meet

fund managers and entrepreneurs on a

trip organised by NZVIF and New Zealand

Trade and Enterprise.

“From a New Zealand perspective, one

of the chief benefits of the partnership

NZVIF has with Taiwan’s National

Development Fund is that it opens access

to new networks and markets for fund

managers and the high growth companies

they invest in. We hope to see more

partnership-style funds emerge over the

next few years.”

Bishop said: “Our investment targets are

technology-centric private companies with

unique strengths and substantial growth

opportunities, including New Zealand

originated technology companies which

will benefit from the growing markets in

China. We have a number of investments

under consideration and there is a strong

pipeline of companies.

“The fund’s investment target sectors

span energy and resource efficiency,

energy storage, agriculture technologies,

medical devices, data analytics and cloud

computing, new materials and other

technologies for climate change mitigation

and adaption.

“With GRC Managers’ experienced

team based in Auckland, Taipei and

Beijing, the fund is well positioned to

invest into companies with technologies

originated from New Zealand and then

foster their growth in China with technical

collaboration from Taiwan.”

The $NZ260 million Venture Investment

Fund was established by the New Zealand

government in 2003 to promote venture

capital investment through co-investment

with private investors.

NZVIF has invested alongside nine

venture capital funds and invested in more

than 60 companies.

INVESTMENT ACTIVITYLOCAL VENTURE FIRM LEADS $US6M FUNDING ROUND IN ISRAEL

Melbourne venture firm Square Peg Capital

has led a $US6 million Series A capital

Cambridge Associates LLC Australia/AVCAL Index Returns for the period ending 31 March 2014

Index (A$) 1-Quarter 1-Year 3-Year 5-Year 10-Year 15-Year

Cambridge Associates LLC Australia Private Equity & Venture Capital Index (A$)1 3.29 23.09 12.27 11.82 10.61 11.69

S&P/ASX 300 Index 1.99 12.97 8.05 13.20 9.21 8.70

S&P/ASX 300 Index mPME2 N/A 12.92 8.35 12.68 6.66 6.72

Value-Add (bps)3 N/A 1,017 393 -86 395 497

The Cambridge Associates LLC indices are an end-to-end calculation based on data compiled from 60 Australia private equity and 25 Australia venture

capital funds, including fully liquidated partnerships, formed between 1997 and 2013.1 Pooled end-to-end return, net of fees, expenses, and carried interest.2 mPME = Modified Public Market Equivalent3 Value-Add (bps) is calculated as the difference between the CA Index return and the S&P/ASX 300 Index mPME return.

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

For media inquiries:

Cambridge Associates:Frank LentiniSommerfield [email protected]+1 212 255 8386

AVCAL:Gabriel McDowellRes [email protected]+61 2 8297 1515+61 417 260 918

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 950 global investors and delivers a range of services, including investment consulting, outsourced investment solutions, research and tools (Research Navigatorsm and Benchmark Calculator), and performance monitoring, across asset classes. The firm compiles the performance results for over 5,400 private partnerships and their more than 68,000 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 1,100 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

The Australian Private Equity & Venture Capital Association Limited (AVCAL) is a national association which represents the private equity and venture capital 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 www.twitter.com/avcal1 www.linkedin.com/company/avcal

round for Israeli online technology business

Feedvisor.

Tel Aviv-based Feedvisor has developed

an algorithmic pricing and business

intelligence platform for online retailers.

The announcement of the new funding

came just under a year after the company

announced a $US1.7 million seed round in

which Israeli investors JAL Ventures, Oryzn

Capital and Micro Angel Fund participated.

All of these investors also committed to

the new round.

According to techcrunch.com, in its

current form Feedvisor focuses on retailers

who use Amazon’s e-commerce platform

but the company’s technology is suitable

for use on other platforms. Feedvisor

helps a retailer keep its prices competitive

by using self-learning algorithms to

autonomously review competitors’ prices,

product demand and price elasticity to

determine best pricing according to pre-

set business objectives.

Feedvisor claims its platform currently

manages over $US1 billion in inventory for

its customers.

PERFORMANCEPRIVATE EqUITY OUTPERFORMS LISTED EqUITIES OVER LATEST YEAR

Australian private equity and venture

capital outperformed the listed market

by over 10 per cent in the 12 months to

the end of March, according to data from

industry association AVCAL and research

organisation Cambridge Associates.

The Cambridge Associates LLC Australia

Private Equity and Venture Capital Index

(CA Australia PE&VC Index) posted a gain

of 23 per cent compared to the S&P/ASX

300 Index which returned just under 13 per

cent gain over the same period.

The CA Australia PE&VC Index showed

the sector’s continuing outperformance

by gaining almost 3.3 per cent in the first

quarter of 2014, after recording a very

positive final quarter of 2013 (APE&VCJ,

June 2014). The three year, 10 year, and 15

year time horizons also showed stronger

returns than listed equities.

But over a five year time horizon the

S&P/ASX 300 Index was ahead by 1.38

per cent, with a gain of 13.20 per cent

compared with the CA Australia PE&VC

Index gain of 11.82 per cent. This reflected

the much faster recovery of listed equities

after the global financial crisis. The 1.32

per cent margin was however well down

on the 2.12 lead that the listed equities

index held for the same time period to the

end of December 2013 suggesting that

this should prove a relatively short lived

reverse against the superiority of private

equity returns over longer periods.

AVCAL chief executive Yasser El-Ansary

said it was encouraging to see such strong

performance from private equity over

a one-year period but he stressed the

importance of longer-term results.

“One of the most important

observations from this latest data is

that when you look at long-term returns

– which are reported net of fees and

costs – across the industry you see very

compelling evidence of why this asset

class should be a feature of all diversified

portfolios for institutional investors,”

he said.

“Our asset class has a long track record

of generating above-normal returns for

super funds and other investors over


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many years. The returns are a direct

reflection of the work done by fund

managers in partnering with their portfolio

companies, and driving a clear growth

strategy which expands businesses

and boosts economic and employment

opportunities.”

Cambridge Associates Sydney office

managing director Eugene Snyman

said: “The strong returns experienced in

Australia rewarded investors who stayed

allocated and invested in the asset class.

In particular, many institutional investors

who followed a disciplined manager

selection and implementation strategy

achieved a net of fees return in excess of

500 basis points above listed markets over

the long term.”

NEW FUNDS AND FUNDRAISINGGLOBAL MANAGER OFFERS DISCOUNTS ON MANAGEMENT FEES

Global manager TPG Capital is offering

potential investors substantial discounts

on management fees as it tries to raise a

$US10 billion new buyout fund, according

to Bloomberg News.

Investors that commit to TPG Partners

VII could get as much as 25 per cent

reduction on fees depending on the

amount committed and whether they

participate in the first round of capital

raising, according to a document obtained

by Bloomberg.

TPG, which controls more than $US59

billion in buyout, credit and real estate

assets, is offering the incentives in the

wake of disappointing returns from deals

made in the buyout boom which then

had to weather the effects of the global

financial crisis. The results cast a shadow

over more than two decades of investment

success for the major US-based funds

manager.

The discount offer follows similar offers

in recent fundraisings by rivals including

Apollo Global Management, Carlyle Group,

Kohlberg Kravis Roberts (KKR) and

Warburg Pincus.

TPG spokesperson Owen Blicksilver

declined to comment on the fundraising

or fee structure.


Bloomberg says that to entice large

commitments TPG is offering 5, 10 and 15

per cent discounts on commitments of

at least $US100 million, $US250 million

and $US400 million respectively. The

document says the firm will give an extra

10 per cent discount to investors that

commit to the first round of capital raising.

This means an investor could be charged

around 1.1 per cent annually on committed

capital rather than the standard large fund

rate of 1.5 per cent.

The document says TPG will take a

standard 20 per cent carried interest on

net profit.

INVESTEE NEWSPOULTRY BUSINESS RATIONALISATION UNDERWAY

TPG Capital investee Inghams Enterprises

has reached agreement to sell and lease

back seven properties in New Zealand in a

deal that will return $NZ57 million.

The buyer of the properties is Wellington

real estate and private equity investment

and advisory firm Caniwi Capital.

Other properties owned by the poultry

business in Australia and New Zealand are

under negotiation for sale and lease back.

TPG put a portfolio of 53 Inghams

properties, valued at more than $600

million, on sale in March. The global private

equity firm had originally hoped to sell

the properties in two large portfolios,

one comprising processing plants,

feed mills and hatcheries and the other

breeder farms.

The Inghams business is to be further

rationalised with a processing facility at

McLaren Flat south of Adelaide scheduled

to be closed in December. Processing is

to be shifted to more efficient facilities

in NSW.

TPG paid $880 million for western

Sydney-based Inghams in 2013 (APE&VCJ,

Mar 13).

INVESTMENT ACTIVTY GLOBAL FIRM TO MAKE FIRST REAL ESTATE INVESTMENT IN AUSTRALIA

Leading global private equity firm

Kohlberg Kravis Roberts (KKR) is to make

its first real estate investment in Australia.

KKR and Abacus Property Group

(ASX: ABP) are to pay $120.4 million

for a 70 per cent interest in Towers 2, 3

and 4 of the World Trade Centre (WTC)

commercial development at Northbank,

Melbourne.

The vendor, Asset 1WTC, will retain 30

per cent.

The investment is to provide an initial

annual yield of 9.3 per cent.

Northbank is a commercial, retail and

residential precinct on the Yarra River

close to the central business district.

The WTC complex was developed

in 1983 and is made up of four

interconnected buildings. Towers 2, 3 and

4 provide a total nearly 50,000sqm of

net leasable area split into 33,500sqm of

office space, 4,600sqm of retail space,

including restaurants and bars fronting

the Yarra River, an 1800sqm childcare

facility and a 310-bay commercial car park.

Towers 2, 3 and 4 are 90 per cent

occupied with over half of the office space

let to the Victorian state government.

KKR is to fund 75 per cent of the equity

component of the investment and Abacus

25 per cent. Abacus will provide property,

asset and development management

services to the WTC.

KKR Asia Real Estate director Bryan

Southgill said the firm was very pleased

to expand its real estate business to the

Australian market. KKR already has Asian

region real estate investments in China,

India and South Korea.

The transaction is subject to FIRB

approval and finalisation of a senior debt

finance facility.

INVESTMENT ACTIVITYDATA CENTRE MONITORING TECHNOLOGY BUSINESS RAISES $8.7M

Melbourne venture firm Square Peg

Capital has invested in a Series A funding

round for data centre monitoring

technology business ScriptRock.

The $8.7 million round was led by US

venture firm August Capital. Another

US venture firm, Valar Ventures, and US

angel investor Scott Petry also invested in

the round.

Founded in Sydney and now based in

California, in 2012 ScriptRock attracted $1.2

million in a seed capital round led by Peter

Thiel’s Valar Ventures.

Other seed investors included Starfish

Ventures, US early stage investor 500

Startups and US and Australian angel

investors Scott Petry, Mark Jung, Bruce

Graham, Paul Bassat (prior to founding

Square Peg Capital), Matt Dickinson, Alan

Jones, Anthony Marcar and Larry Marshall.

Joint chief executives of ScriptRock,

Mike Baukes and Alan Sharp-Paul, plus a

third co-founder, developed the business

through the 2012 Startmate incubator

programme.

Startmate last month (August) opened

applications for its next intake.

INVESTMENT ACTIVITYGROWTH FUND TAKES STAKE IN BEAUTY TREATMENTS BUSINESS

Archer Capital has made a growth

investment in LaserClinics Australia (LCA).

LCA operates a chain of cosmetic

treatment clinics specialising in injecting

botox and fillers as well as laser treatment

to remove unwanted hair and skin

blemishes.

Founded in 2008, LCA says its annual

revenue has grown from $20 million

in 2012 to almost $100 million. The

company currently operates 34 clinics

and expects to increase that number to

about 40 over the next two years. Growth

of the company has been fuelled by

commoditisation of non surgical beauty

treatments.

The business uses a semi-franchised

business model with ownership of

individual clinics shared equally between

LCA and franchisees.

LCA was founded by Babak Moini and

Alistair Champion and operations are now

directed day to day by general manager

Ian Houlton.

Archer has made an unspecified

investment in LCA from its Growth Fund 2.

The fund makes substantial investments

in businesses with enterprise values in the

range $20 million to $100 million.

In January, Archer Growth invested

in GoGet, Australia’s largest car sharing

business.

GoGet manages a fleet of vehicles

available to subscribers to its service

from dedicated on and off-street parking


locations throughout Sydney, Melbourne,

Brisbane and Adelaide.

GoGet is also the owner of Fleetcutter,

a business that develops and operates

telemetric hardware and software to

manage vehicle fleets.

PERFORMANCELISTED MANAGER DOUBLES ASSETS UNDER MANAGEMENT

Listed funds manager Blue Sky Alternative

Investments (ASX: BLA) has doubled its

assets under management over 12 months.

Over the year to 30 June 2014, Blue Sky

increased its assets under management

from about $340 million to more than

$700 million.

Announcing its full year results on 26

August, the company said the growth

in assets under management reflected

strong deal flow activity, increased

demand from private investors plus further

engagement with institutional investors

and family offices.

An important milestone was reached

at the end of the financial year with the

successful launch of the listed Blue Sky

Alternatives Access Fund (ASX: BAF)

in June. The fund raised more than $60

million to be deployed across Blue Sky’s

range of alternative asset strategies.

Blue Sky reported an underlying net

profit after tax of $6.24 million (up 60

per cent from the $3.89 million reported

for the 2013 financial year) on revenue of

$24 million (up 69 per cent from the $14.2

million reported for 2013).

The company is to pay a fully franked

dividend of seven cents per share.

In its report, Blue Sky said its growth

could in part be attributed to the

“mainstreaming” of alternative assets as an

investment choice.

The company said it anticipated that its

listed fund would play an important role in

drawing alternatives investment from the

self-managed super, private wealth, retail

and wholesale client investment segments.

Blue Sky founder and managing director

Mark Sowerby said he expected the

current year to show further progress for

the company.

“We have worked hard to deliver

strong investor returns in our underlying

funds over a significant period of time

and this persistence is being rewarded

with increased investor engagement and

quality deal flow,” he said.

Sowerby said expansion from the firm’s

Brisbane base into Sydney and Melbourne

as well as substantial investment in its

team provided a platform to broaden

investment and investor horizons.

“We remain committed to our vision

to build Australia’s leading diversified

alternative asset manager,” he said.

Blue Sky was established in 2006 and

was listed on the ASX in January 2012.

The company is Australia’s only listed fund

manager investing across a diversified

range of alternative assets. Blue Sky’s

portfolios include private equity and

venture capital, real estate, infrastructure,

hedge funds, water entitlements and

agribusiness.

PEOPLE MOVESGLOBAL BUYOUT FIRM RECRUITS LOCALLY FOR INDONESIA PUSH

Kohlberg Kravis Roberts (KKR) has

recruited an Indonesian educated

executive to lead the firm’s activities in the

country.

Jaka Prasetya, founder and former

managing partner of Leafgreen Capital

Partners, has been appointed a managing

director and will work with KKR’s private

equity, credit and special situations teams.

In addition to his Indonesia responsibilities,

Prasetya will lead KKR’s credit business

throughout South-East-Asia.

Two other former Leafgreen partners,

Rahul Bhargava and Allan So, have

also joined KKR. All three are based in

Singapore.

Prasetya launched Leafgreen in 2011 to

finance mid-cap companies in Indonesia,

Malaysia and Singapore. He is a graduate

of electrical engineering from the Institut

Teknologi, Bandung, West Java.

Bahargava has an MBA from

the Australian Graduate School of

Management.

KKR Asia private equity co-head Ming Lu

said: “Indonesia continues to be a dynamic

market for investment with great growth

potential and positive demographics

driving opportunities. With our first deal in

the market in 2013 (KKR acquired a 9.5 per

cent stake in PT Tiga Pilar Sejahtera Food

Tbk), we look forward to exploring new

opportunities to provide both equity and

credit solutions to companies to suit their

long term needs.”

Lu said the new team members’

understanding of the culture and business

environment in Indonesia would greatly

enhance KKR’s ability to partner with local

companies.

KKR closed its second Asia fund at $6

billion in 2013, the largest fund ever raised

for investment in the region.

INVESTMENT ACTIVITYCORPORATE VENTURER INVESTS IN DATA COLLECTION BUSINESS

Corporate venture operation Reed Elsevier

Ventures has led a $6 million Series C

capital raising by Yuuwa Capital investee

Agworld.

The Perth-based venture capital firm

also participated in the round.

Agworld says its technology enables

agricultural industry users to efficiently

collect data in the field using digital pen

devices linked to mobile phones. The

mobile phones transmit the data to cloud-

hosted records and reference data.

The West Australian-based firm said

the new funding will enable it to achieve

key goals of US market expansion and an

expansion of its product offering.

The company claims to be the leading

provider of information management and

technology in its core agricultural industry

markets.

INVESTMENT ACTIVITY$1M FUNDING FOR DEVELOPMENT OF NEW PRODUCTS

Starfish Ventures, Tank Stream Ventures

and US technology accelerator 500

Startups have provided website

development bug tracking business

BugHerd with an additional $1 million in

Series A funding.

The new funding, most of which has

been provided by the two Australian

venture capital firms, is to be used to assist

BugHerd with product expansion.

Melbourne-based BugHerd is splitting

its eponymous product into three separate

products to serve more specialised needs.


The company is to recruit more staff to

help with developing the new products.

INVESTEE NEWSPLANT VIRUS PROTECTION ATTRACTS GLOBAL AGRI-BUSINESS

Venture-backed Nexgen Plants Pty Ltd has

entered into a collaborative arrangement

with global agri-business Syngenta (NYSE:

SYT, SIX: SYNN).

The arrangement is to be used develop

resistance to three key viruses in major

crops.

Nexgen Plants is commercialising a

cutting edge virus resistance technology

developed by University of Queensland

researchers led by Professor Peer Schenk.

Nexgen Plants was formed in August

2013 on the back of closing a $2 million

Series A round from Yuuwa Capital,

Uniseed and UniQuest (APE&VCJ, Oct

13). The company is implementing an

extensive programme to demonstrate

its virus resistance technology across a

broad range of crop and virus types and is

progressively engaging with leading plant

biotech companies around the world.

Perth-based venture firm Yuuwa

Capital invests in early stage companies

principally in the areas of life sciences

and ICT. Uniseed is a venture fund

manager operating at the universities

of Melbourne, Queensland and NSW.

Uniseed’s investment capital is provided

by the universities and superannuation

fund AustraliaSuper. UniQuest is the

main commercialisation company of the

University of Queensland.

Nexgen Plants’ technology is based

on the identification of a new class of

small plant virus RNA molecules (miRNA)

which are involved in modulating a

plant’s defence response to virus attack.

The company says discovery and the

development of associated propagation

methods enable the introduction of virus

resistant traits into major crops. This

offers farmers the potential for improved

yields and plant breeding companies

a unique competitive advantage for

boosting seed and/or plant productivity

and sales.

Nextgen Plants chief executive Brian

Ruddle said: “Crop losses from viral

infections are a multi-billion dollar global

problem. The Nexgen Plants technology

provides plant breeding companies with

a range of virus resistance strategies

covering transgenic, cisgenic and marker-

assisted approaches.”

Professor Schenk explained: “The

Nexgen technology can confer virus

resistance into existing commercial

varieties or in parent lines as part of

hybrid seed production. Plant viruses

would have to develop an extremely

unlikely mutation for the resistance to be

broken.”

Head of external collaborations at

Switzerland-based Syngenta, Moshe Bar,

said the company had been attracted

to the Nexgen technology because of

its compelling commercially focused

science and the potential for it to be used

to dramatically improve virus resistance

characteristics across breeding programs.

NEW FUNDS & FUNDRAISINGASIAN REGION FUND APPROACHING TARGET

Kuala Lumpur-based private equity firm

Navis Capital has reached $US1.4 billion for

its Fund VII and is anticipating a December

close at the hard cap of $US1.5 billion, Alt

Assets website has reported.

In February the fundraising had been

reported to have reached $US1.3 billion.

Navis has made at least eleven principal

investments in Australia and numerous

follow-on acquisitions.

The latest Australian acquisition was

Guardian Early Learning Group which was

acquired from Wolseley Private Equity for

around $120 million last year (APE&VCJ,

Sept 13).

Navis established a Sydney office in

2006.

NEW FUNDS & FUNDRAISINGLISTED ALTERNATIVES FUND MAKES LARGE ALLOCATION TO WATER

Blue Sky Alternative Investments (ASX:

BLA) has allocated to its water fund a

quarter of the $60 million raised on the

ASX with the float of its listed investment

company Blue Sky Alternatives Access

Fund (ASX: BAF).

Nearly 70 per cent of the raising has

been allocated so far. In addition to water,

the capital has been allocated across

Blue Sky’s private equity, venture capital,

agriculture, hedge fund and private real

estate strategies.

Chief investment officer Alexander

McNab said the large allocation to the Blue

Sky Water Fund was “based on our long

held conviction that structural drivers in

the marketplace will increase demand for

water as a scarce commodity”.

“Water has a low correlation to listed

equities and, alongside our hedge fund, it

is the most liquid asset in the portfolio,” he

added.

The water fund invests in water

entitlements and returned 15.58 per cent

for the 2014 financial year.

Nearly 13 per cent has been invested

in the Blue Sky Investment Science IS

16Q hedge fund, which has returned 15.02

per cent per annum since inception in

2007.

“This provides a good balance with the

private equity, venture capital and private

real estate investments, which traditionally

see higher returns but have low liquidity

and a higher degree of correlation to the

business cycle,” McNab said.

Close to a third (31 per cent) of the listed

investment company’s capital is yet to be

allocated.

McNab said this capital was being

retained for investment opportunities

as they arose. These were likely to be in

private equity or real estate so would

increase the allocations to those asset

classes.

He said investor appetite for alternative

investments was growing globally and the

Blue Sky Alternatives Access Fund gave

financial planning, private wealth, self-

managed super fund and retail investors

the ability to invest in alternatives through

an ASX-listed structure which made these

investments more accessible and more

liquid than through conventional unlisted

funds.

Blue Sky Alternatives Access Fund’s

allocations will provide:

• $15 million for the Blue Sky Water Fund

to invest in a diversified portfolio of

agricultural water entitlements.

• $7.5 million for Blue Sky Investment

Science’s IS 16Q quantitatively-driven

hedge fund to invest in highly-liquid


equity, commodity, fixed income and

currency markets.

• $4.4 million for the new Blue Sky

Agriculture Fund to invest in farmland

and ground water.

• $4 million for private equity investee

Foundation Early Learning to use to

fund acquisition of 15 childcare centres.

• $4 million for Blue Sky Venture

Capital’s VC2014 fund, for which

fundraising was launched in July with

a target of $30 million.

• $2 million to private equity investee

Wild Breads to help fund growth

for the artisan and specialty bread

manufacturer.

• $2 million across two of Blue Sky

Private Real Estate’s residential

developments in up-and-coming inner-

city Brisbane suburbs.

INVESTMENT ACTIVITYHEALTHCARE COMPANY IN $3.6M CAPITAL RAISING

Venture capital-backed healthcare

company Fitgenes Limited (ASX: FIT) has

launched a prospectus to raise up to $3.6

million.

The company – formerly ATW Holdings

Limited – is to seek re-listing on the ASX.

A total of 12 million shares, representing

28.6 per cent of the company, are to be

issued at 30 cents a share. The minimum

investment parcel size is $2,000.

Perth venture capital firm Yuuwa Capital

took up a $1 million converting note as part

of the company’s mezzanine capital raising

round.

Brisbane-based Fitgenes announced on

26 June that Yuuwa Capital’s investment

had brought total subscription for the

mezzanine round to $1.6 million.

In a revised prospectus issued on 1

August, Fitgenes says that over the last

five years it had developed a robust and

highly scalable technology platform

which hosts and delivers what it believes

is one of the most advanced evidence

and genomics-based healthcare and

wellness programmes. The company says

it has built a strong brand, commercially

validated its services and products and

established a certified practitioner network

across Australia, New Zealand, Singapore,

Malaysia, Hong Kong and the US.

Chairman of Fitgenes is Dr Carrie

Hillyard. Liddy McCall of Yuuwa Capital is

to become a director of the company once

it completes re-compliance.

The offer closes on 30 September.

INFORMAL VENTURE CAPITALJET PACK RAISING REACHES $NZ3M

No 8 Ventures investee Martin Aircraft

Company has raised $NZ3 million of a

planned $NZ5 million pre-IPO round.

The round is attracting strong investor

interest and forty people attended an

investor briefing session in Sydney last

month (August).

At the briefing, Martin chief executive

Peter Coker said the company expected to

launch commercial production and sales

next year.

The Martin aircraft is claimed to be the

world’s first practical jet pack.

The aircraft is powered by a 200hp V4

two-stroke petrol Mercury engine. Key

original technology is in the fans and

ducting which provide lift. This technology

is covered by a number of patents.

The one-man or remote control aircraft

is expected to retail at around $200,000

which would make it 60-70 per cent

cheaper than the least expensive helicopter

and unlike a helicopter it can be operated

in very restricted spaces. Marketing will

initially be targeted at government sectors

such as fire services, search and rescue,

disaster recovery and border security.

Wellington-based No 8 Ventures,

which is now in run-down mode, is the

largest shareholder in Christchurch-based

Martin and has been an investor since

2004. Glenn Martin, who spent 30 years

developing the technology, is also a major

shareholder.

The pre-IPO capital raising is being

managed by Sydney firm Axstra Capital.

PEOPLE MOVESPLACEMENT AGENT HEAD SWAPS LONDON FOR HONG KONG

Mounir Guen, founder and chief executive

of placement agent and advisory firm

MVision has relocated from London to

Hong Kong.

The move will help Guen lead expansion

of MVision’s business in the Asia Pacific

region.

Guen said: “We are seeing an extremely

broad spectrum of activity here. Asia

is currently the world’s most dynamic

economic region and there are few

limitations on opportunities for private

equity. My move to Hong Kong is a

key part of the firm’s continuing global

expansion and our presence here will not

only enhance our existing relationships in

the region but allow us to take advantage

of new opportunities as well.

“Progress of local managers with the

ability to raise large funds, the evolution

of regional institutions as prominent

investors in private markets and also the

heightened demand from international

limited partners to gain better access

to Asian opportunities are the three

fundamentals trends informing this

decision.”

MVision is to remain centrally managed

from its London headquarters.

The firm is also planning to strengthen

its international office network which

currently includes New York, Hong Kong

and Sydney where MVision is represented

by managing director Nikki Brown who

has been with the firm since 2001.

NEWSCITY MAY OFFER SHARE IN $NZ2BN COMMERCIAL ASSETS

The council of New Zealand’s second

largest city, Christchurch, may invite

a strategic partner to take a stake in

its commercial and investment arm.

Alternatively, the council may offer stakes

to a number of investors.

Christchurch newspaper The Press has

reported mayor Lianne Dalziel as saying

that offering a strategic partnership

in Christchurch City Holdings (CCHL)

is an option the city might take in its

revitalisation efforts following the 2010 and

2011 earthquakes.

Maori investment fund manager Ngai

Tahu is seen as one likely investment

partner.

Established in 1993, CCHL holds majority

stakes in businesses including regional

electricity distribution company Orion New

Zealand, Christchurch International Airport,


Lyttleton Port, Red Bus and broadband

network company Enable Services.

CCHL’s assets are valued at well over

$NZ2 billion.

PERFORMANCELIFE SCIENCES VENTURE FIRM ExITS US INVESTMENT

South Australian life sciences venture

capital firm Terra Rossa Capital has

exited an investment in Reverse Medical

Corporation as a result of the the Irvine,

California, company being acquired by

Covidien plc (NYSE: COV).

Other sellers, according to S&P Capital

IQ, included BioStar Ventures, Early Stage

Partners, Emergent Medical Partners, NBGI

Ventures and yet2Ventures.

Financial details of the acquisition have

not been disclosed.

Reverse Medical is developing catheter-

based prophylactic devices. These include

devices to be used during surgery to

capture blood clots that might cause

a stroke and devices to remove clots

trapped in blood vessels in the brain as a

result of a stroke.

Reverse Medical is to become part of

the neurovascular product line section in

Covidien’s medical devices segment.

Adelaide-based Terra Rossa was

established in 2006 and manages

the South Australian Life Sciences

Advancement Fund. The fund is supported

by one limited partner, MTAA Super.

Ireland-based Covidien is a $US10 billion

annual revenue company.

PERFORMANCERANGE OF ALTERNATIVES RETURN 14.8 PER CENT OVER EIGHT YEARS

Blue Sky Alternative Investments (ASX:

BLA) has reported a lift in the overall

performance of its funds driven primarily

by private equity, venture capital and water

entitlements.

From inception in July 2006 to the end

of June this year the funds have generated

equity weighted internal rate of return

(IRR) of 14.8 per cent net of fees. This

represents 0.9 per cent improvement

over the 13.9 per cent performance figure

reported in May.

The company said private equity and

venture capital returns had increased as

investments matured and approached

exit and the Blue Sky Water Fund had

performed strongly returning 15.6 per cent

(net of fees) to investors over the 2014

financial year.

Private real estate and hedge fund

investments produced marginally lower

returns.


Blue Sky committed to providing

further portfolio updates every six

months following half yearly reviews of its

investment portfolio.

NEWS‘COMPANY TO WATCH’ ACqUIRED FOR $80M

Organic yoghurt producer Five: Am

– which was nominated as “Growth

Company to watch” in last year’s Australian

Growth Company Awards –has been

acquired by UK-based PZ Cussons plc

(LSE: PZC) for $80 million.

The vendor was David Prior who

founded Five: Am three years ago.

In 2013 Anacacia Capital (APE&VCJ, Jul

13) exited baby food company Rafferty’s

Garden with a $70.05 million sale to

Cussons.

Nominations for this year’s Growth

Company awards close on 15 September.

For more information visit: www.sparke.

com.au/growthawards

INVESTEE NEWSUS MEDIA ExECUTIVES MENTOR SYDNEY START-UP STAFF

OneVentures investee Incoming was one

of six companies to take part in Turner/

Warner Bros’ second annual Media

Camp start-up accelerator programme in

California last month (August).

More than 50 executives of the media

companies mentored key staff of the early

stage businesses.

Sydney-based Incoming is

commercialising predictive behavioural

machine learning and network

management technology developed at the

National ICT Centre of Excellence (NICTA).

The technology is being applied to provide

better access to video material from

mobile devices.

Incoming’s first product, Incoming TV

for mobile, has been downloaded by 1.5

million users. The app monitors users’

video downloading behaviour to predict

future usage and then downloads, at off-

peak times, material likely to be sought.

This reduces demand for bandwidth

at peak times and – significantly for

communications carriers – should make

mobile video users more successful in

downloading the content they want.

Incoming initially targeted mobile video

users but has now shifted its focus to

communications carriers recognising that

they value their end-users having access to

content via mobile devices.

Chief executive Tom Adam says

Incoming is seeking to make watching

video on mobile devices as seamless as

watching television. That is, however, not

the case today with the result that end-

users often “bail out”.

He said downloading difficulties are

inevitable because content distribution

networks were not designed for

transmitting video to mobile devices.

Incoming’s “pre-positioning” of video

content is a way of getting around this.

INVESTEE NEWSWIRELESS CHARGING TEST OFFERED TO ELECTRONIC DEVICE MAKERS

New Zealand-founded technology company

PowerbyProxi has released an evaluation kit

for electronic devices manufacturers to test

its wireless charging technology.

The Proxi-2D EVK-1 kit includes a

7.5W power transfer receiver which

PowerbyProxi claims is the most powerful

wireless power delivery currently available.

The kit can be used for charging a variety

of devices up to 15W.

Venture-backed PowerbyProxi

demonstrated the system at the Computex

exhibition in Taiwan in June. The company

claims the system offers significant

improvements over the 3.5W-5W systems

currently available.

PowerbyProxi chief executive Greg

Cross said: “The Proxi-2D EVK-1 is the next

step towards getting advanced resonant

wireless charging technology in the hands

of consumers. “Allowing customers to

experience the safety, efficiency and speed

first-hand furthers our goal to enable

innovation in the market.”

PowerbyProxi, which holds a portfolio

of 221 patents worldwide, licenses its

technology and delivery modules to

equipment manufacturers.

The company was established to

commercialise technology developed at

the University of Auckland.

New Zealand venture capital firm Movac

was an early investor in PowerbyProxi and

last year electrical connection devices

company TE Connectivity (NYSE: TEL) led

an investment round which also included

Movac.

CONFERENCES & ROUNDTABLESINVESTORS TO ExAMINE STRATEGIES AT START-UP EVENT

Leading investors will offer advice on

entrepreneurs’ business strategies in front

of a live audience at Tech23 in Sydney on

23 October.

Now in its sixth year, Tech23 is a

technology start-up event designed to

introduce entrepreneurs to customers,

partners and investors. Winners receive

significant prizes.

Twenty-three start-ups will be selected

to present at the event from an expected

150 applicants from all over Australia.

They will present in front of an audience

expected to number more than 400.

The entrepreneurs’ strategies will

be examined by expert panels. Panel

members will include Paul Bassat of

Square Peg Ventures, Michelle Deaker of

OneVentures, angel investor Leni Mayo,

Daniel Petre of AirTree Ventures and

Deena Shiff of Telstra Ventures.

A selection of tech companies at

earlier stages of development will also be

represented at the event, manning booths

in the Innovation Island exhibition outside

the auditorium where presentations will be

made.

Event founder Rachel Slattery, of

Slattery IT, said: “The entire event is

orchestrated to put young tech companies

in direct contact with the people that will

help their businesses grow.”

Event sponsors include NICTA and

CSIRO and emphasis will also be placed

on businesses which use IP developed

with the support of Australian R&D

organisations.

Tech 23 has been the launching pad for

many successful start-ups. The founders

of taxi booking app GoCatch met two of

their three initial investors at Tech23 2010

and the founders of bug tracing service for

IT developers BugHerd were introduced to

their later venture capital investors Starfish

Ventures at the 2011 event.


Dr Dror Ben Naim, founder of online

learning business Smart Sparrow, said the

2012 event had been an important step in

gaining the right exposure for his business.

“Tech23 really helped with media, social

proof and credibility,” he said.

Smart Sparrow is now an investee of

venture capital firm OneVentures and has

expanded its customers from Australian

universities to overseas universities and

international learning services providers.

Prizes at Tech23 2014 will include the

ATP Innovations Explorer Award, which

comprises a week of hosted meetings in

Silicon Valley with potential investors and

customers, and cash prizes from REA

Group and Bendigo Bank. A number of

Tech23 alumni are also offering mentoring

sessions and subscriptions to their

services.

For further information visit: www.

tech23.com.au

INVESTMENT OPPORTUNITY

ONLINE BUSINESS - GLOBAL APPLICATION

Opportunity for tech-smart operator at minimal cost to run

business for two years, expanding consumer base through social

media and other marketing, view global license at end of term.

Please respond by email: [email protected]

FEATURE


Australian mid-size retailers with

fully integrated service models are

emerging as increasingly attractive

targets for private equity, according to a

report by accountancy firm Grant Thornton.

The report – Retail Dealtracker Report,

Checkout: Shopping for Growth – ranks

Australia seventh globally in terms of M&A

deal volume for the retail sector, a ranking

that is all the more impressive considering

Australia’s economy is significantly smaller

than many of the countries in the rankings.

From the point of view of retail

businesses, the report says private equity

is becoming an ideal partner for mid-size

companies looking for strategic support

and access to capital to execute their

growth plans. Meanwhile, private equity

firms are targeting retail businesses in

large deals.

Private equity firms were the buyers in

several of the largest transactions during

the report’s study period – the three years

to the end of June 2014. Acquisitions in

Australia, were typically followed up with

private equity firms providing additional

investment to finance growth plans.

Despite challenging conditions persisting

in the retail sector in the wake of the

global financial crisis, the report notes

that Australian businesses that are

adapting to changing markets and are

seen as representing good investment

potential.

Peter Thornely, Retail Industry Partner,

Grant Thornton Australia, said: “Despite

the retail pressures, the report highlights

a new retail industry emerging where

businesses offering strong customer

relationships as a point of difference are

providing the best growth opportunities

for private equity investors.

“We’re seeing growth in niche areas like

the pet industry. Big box pet stores have

become the relationship point for pet

owners, offering everything from puppy

training to high end veterinary care to meet

customer needs.”

Meanwhile, shopping centres are

being transformed to stay relevant top

consumers. This includes providing

entertainment and high end dining to draw

foot traffic, a clear trend that retail success

is centred on fully integrated customer

service models.

Mid-size businesses which have partnered

with private equity firms have typically

been able to accelerate growth plans.

“Businesses are thriving post investment

from private equity firms,” Thornely said.

“We’ve seen the likes of Lorna Jane – post

investment by CHAMP Ventures – continue

LOCAL RETAIL SECTORHAS GLOBAL APPEAL

AUSTRALIAN RETAIL

BUSINESSES ARE ATTRACTING

PRIVATE EQUITY INVESTMENT

FROM LOCAL AND OVESEAS

FIRMS.

Australian transaction levels

Key commentsThe countries with the highest number of deals were the United States (US), United Kingdom (UK) and Japan, with Australia placed seventh globally in terms of deal volume over the observed period. This is a high ranking for Australia considering the relative size of our economy.

There was also a reasonably high level of international interest in acquiring retail businesses in Australia, with at least 25% of the Australian retail businesses that were sold having international buyers.

Australian deals

Overseas buyers are interested in Australian retail businesses because of our stable

regulatory environment and our strong positioning in the Asia Pacific region. Some buyers

may also be attracted to acquiring businesses in Australia due to the current strong value

of our dollar. For example, some of Zara’s most profitable operations are in Australia.

3%4%

25%

54%

22%

Cross border inbound

Domestic

Undisclosed

Total deal position (Top 15 countries)Position Country Consumer

Goods RetailDistributors/

Wholesale (Ex. Food)Food Retail Large Retail

StoresOnline Retail Total deals

1 United States 233 291 477 5 155 1,161

2 United Kingdom 116 127 421 4 51 719

3 Japan 85 68 81 2 22 258

4 France 41 62 60 6 37 206

5 Germany 32 38 27 2 29 128

6 Russia 37 39 30 4 6 116

7 Australia 22 28 45 2 17 114

8 Sweden 27 41 19 2 23 112

9 Canada 30 40 32 1 5 108

10 China 12 53 22 14 6 107

11 Netherlands 24 38 22 2 11 97

12 Spain 18 32 23 2 7 82

13 Italy 22 21 21 2 3 69

14 Finland 17 23 19 1 5 65

15 Malaysia 6 33 23 1 1 64

Total 722 934 1,322 50 378 3,406*Refers to deals where the target company is located in the country listed

Sources: Standard & Poor’s Capital IQ, Mergermarket, Grant Thornton analysis

Dealtracker for the retail industry 3

2011 20122014

2013

0

50

100

150

200

250

300

350

400

450

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Num

ber o

f dea

ls

Total deals Average total deals (309)

Transaction levels

Globally, between 1 January 2011 and 30 June 2014 there have been 4,328 international merger and aquisition (M&A) transactions within the retail industry. Of these deals, there were 114 deals where the target’s primary operations were listed as being in Australia.

Australia’s distribution of deals according to retail subsector was comparable to global deals, however Australia had proportionately more deal activity in Food and Online Retail.

Deal levels• Deal volumes were lower in 2013 than 2012 and 2011.

This is not surprising given that 2013 was the slowest year for M&A activity globally since 2009.*

• Globally, the low deal levels continued into the first half of 2014. However, Australia’s deal activity in the second quarter of 2014 picked up 75% on the first quarter of 2014, with the total number of deals increasing from 4 in Q1 2014 to 7 in Q2 2014.

International deal activity

International deal mix

Australian deal mix*

Sources: S&P’s Capital IQ, Mergermarket, Grant Thornton analysis

Sources: S&P Capital IQ, Mergermarket, Grant Thornton analysis

Food Retail (1,575 deals)

Distributors/Wholesalers (Ex. Food) (1,249 deals)

Consumer Goods Retail (968 deals)

Online Retail (460 deals)

Large Retail Stores (76 deals)

36%

29%

22%

11%

2%

309

2011 20122014

2013

0

50

100

150

200

250

300

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Num

ber o

f dea

ls


As retail conditions are slowly improving, we

expect the level of M&A activity in the sector to

increase. A recent positive sign in Australia was

the recent acquisition by US PE firm, Bain Capital,

of a majority stake in Retail Zoo (owner of Boost

Juice). Other signs of improved market confidence

in the sector include the Initial Public Offering

(IPO) of Beacon Lighting, e-commerce business

Mysale’s recent listing on AIM and South African

retailer Woolworth’s takeover offers for David

Jones and Country Road.

Food Retail (45 deals)

Distributors/Wholesalers (Ex. Food) (28 deals)




* Refers to deals where the target is listed as being in Australia.Sources: S&P Capital IQ, Mergermarket, Grant Thornton analysis

39%

25%

19%

15%

2%

Source: *Australian Financial Review 23 January 2014, which quoted Thomson Reuters

2011 20122014

2013

0

50

100

150

200

250

300

350

400

450

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Num

ber o

f dea

ls

Total deals Average total deals (309)Total deals Average total deals (309 deals)

2011 20122014

2013

0

50

100

150

200

250

300

350

400

450

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Num

ber o

f dea

ls


2 Checkout: Shopping for growth

Australian transaction levels

Key commentsThe countries with the highest number of deals were the United States (US), United Kingdom (UK) and Japan, with Australia placed seventh globally in terms of deal volume over the observed period. This is a high ranking for Australia considering the relative size of our economy.

There was also a reasonably high level of international interest in acquiring retail businesses in Australia, with at least 25% of the Australian retail businesses that were sold having international buyers.

Australian deals

Overseas buyers are interested in Australian retail businesses because of our stable

regulatory environment and our strong positioning in the Asia Pacific region. Some buyers

may also be attracted to acquiring businesses in Australia due to the current strong value

of our dollar. For example, some of Zara’s most profitable operations are in Australia.

3%4%

25%

54%

22%

Cross border inbound

Domestic

Undisclosed

Total deal position (Top 15 countries)Position Country Consumer

Goods RetailDistributors/

Wholesale (Ex. Food)Food Retail Large Retail

StoresOnline Retail Total deals

1 United States 233 291 477 5 155 1,161

2 United Kingdom 116 127 421 4 51 719

3 Japan 85 68 81 2 22 258

4 France 41 62 60 6 37 206

5 Germany 32 38 27 2 29 128

6 Russia 37 39 30 4 6 116

7 Australia 22 28 45 2 17 114

8 Sweden 27 41 19 2 23 112

9 Canada 30 40 32 1 5 108

10 China 12 53 22 14 6 107

11 Netherlands 24 38 22 2 11 97

12 Spain 18 32 23 2 7 82

13 Italy 22 21 21 2 3 69

14 Finland 17 23 19 1 5 65

15 Malaysia 6 33 23 1 1 64

Total 722 934 1,322 50 378 3,406*Refers to deals where the target company is located in the country listed

Sources: Standard & Poor’s Capital IQ, Mergermarket, Grant Thornton analysis


2011 20122014

2013

0

50

100

150

200

250

300

350

400

450

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Num

ber o

f dea

ls


Transaction levels

Globally, between 1 January 2011 and 30 June 2014 there have been 4,328 international merger and aquisition (M&A) transactions within the retail industry. Of these deals, there were 114 deals where the target’s primary operations were listed as being in Australia.

Australia’s distribution of deals according to retail subsector was comparable to global deals, however Australia had proportionately more deal activity in Food and Online Retail.

Deal levels• Deal volumes were lower in 2013 than 2012 and 2011.

This is not surprising given that 2013 was the slowest year for M&A activity globally since 2009.*

• Globally, the low deal levels continued into the first half of 2014. However, Australia’s deal activity in the second quarter of 2014 picked up 75% on the first quarter of 2014, with the total number of deals increasing from 4 in Q1 2014 to 7 in Q2 2014.

International deal activity

International deal mix

Australian deal mix*

Sources: S&P’s Capital IQ, Mergermarket, Grant Thornton analysis

Sources: S&P Capital IQ, Mergermarket, Grant Thornton analysis

Food Retail (1,575 deals)

Distributors/Wholesalers (Ex. Food) (1,249 deals)




36%

29%

22%

11%

2%

309

2011 20122014

2013

0

50

100

150

200

250

300

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Num

ber o

f dea

ls


As retail conditions are slowly improving, we

expect the level of M&A activity in the sector to

increase. A recent positive sign in Australia was

the recent acquisition by US PE firm, Bain Capital,

of a majority stake in Retail Zoo (owner of Boost

Juice). Other signs of improved market confidence

in the sector include the Initial Public Offering

(IPO) of Beacon Lighting, e-commerce business

Mysale’s recent listing on AIM and South African

retailer Woolworth’s takeover offers for David


Food Retail (45 deals)

Distributors/Wholesalers (Ex. Food) (28 deals)




* Refers to deals where the target is listed as being in Australia.Sources: S&P Capital IQ, Mergermarket, Grant Thornton analysis

39%

25%

19%

15%

2%

Source: *Australian Financial Review 23 January 2014, which quoted Thomson Reuters

2011 20122014

2013

0

50

100

150

200

250

300

350

400

450

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Num

ber o

f dea

ls

Total deals Average total deals (309)Total deals Average total deals (309 deals)

2011 20122014

2013

0

50

100

150

200

250

300

350

400

450

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Num

ber o

f dea

ls



FEATURE


to enjoy strong growth, accessing overseas

markets and using social media to engage

with followers.”

Buyers within the local market have been

seeking businesses with strong brands and

omni-channel strategies.

“It’s imperative for mid-size retailers

to build omni-channel strategies in an

attempt to attract customers and service

all their needs whether they are in store

or online. This trend is driving M&A activity

within the sector as retailers look to secure

their e-commerce channels by acquiring

online businesses. We’re also seeing high

multiples paid for these online businesses,

most notably those of a reasonable size in

a specialist niche,” Thornely said.

The report says international buyers

accounted for at least 25 per cent of

Australian retail acquisitions over its study

period.

“Overseas buyers are interested in

Australian retail businesses because of

our stable regulatory environment, our

strong positioning in the Asia Pacific region

and the strength of our currency,” said

Thornely. “We’ve seen how (Spain-based)

Zara has benefited from this ... some of its

most profitable operations are reportedly

in Australia.”

Turning to details in the report, the

spread of deals across retail subsectors

in Australia was largely in line with

the global spread but Australia had

proportionately more deal activity in

food and online retail. There were 45

M&A deals in food retail, 28 in distribution

and wholesaling (excluding food), 22 in

consumer goods retail, 17 in online retail

and two involving large retail stores.

The report notes that private equity

firms are particularly interested in acquiring

businesses with strong brands, solid

cash flows and leading positions in niche

markets.

In regard to niche markets, Michael

Green, managing partner of Melbourne

investment company Green Capital

Partners is quoted as saying his company

focuses on niche opportunities in retail

where broader trends are creating “wind at

your back” and increased growth potential.

Green Capital Partners is a significant

investor in Sydney health food-focused

supermarkets business About Life.

Top 10 international deals*

1 Acquirer: Loblaw Companies Limited Target: Shoppers Drug Mart Corporation Deal value: A$14,324 million (m) Acquirer country: Canada Target country: Canada Date: 28/03/2014 EV/EBITDA Multiple: 11.1x

Loblaw Companies Limited (Loblaw), a subsidiary of George Weston Limited, is one of Canada’s largest food retailers and a leading provider of drugstore, general merchandise and financial products and services. Shoppers Drug Mart Corporation was the licensor of full service retail drug stores. The acquisition strengthened Loblaw’s market position in the growing health, wellness and nutrition sectors of the market. The acquisition was also expected to yield annual cost synergies of $300m within three years.

2 Acquirer: Temasek Holdings Pte. Target: Olam International Ltd. Deal value: A$11,758m Acquirer country: Singapore Target country: Singapore Date: 23/05/2014 EV/EBITDA Multiple: 11.6x

Temasek Holdings Pte. is a Singaporean government owned investment firm. Temasek Holdings acquired an additional 75% stake in Olam, one of the world’s largest suppliers of cocoa, coffee and nuts and also one of the largest cotton companies. Temesak was seeking to capitalise on the expected increase in global demand for food.

3 Acquirer: Ares Management LLC; Canada Pension Plan Investment Board Target: Neiman Marcus Group LTD LLC Deal value: A$6,657m Acquirer country: United States Target country: United States Date: 25/10/2013 EV/EBITDA Multiple: NA

Neiman Marcus Group Ltd LLC (Neiman Marcus) is one of the largest luxury, department store retailers in the US. It also operates a high end, online retailing division. The two PE funds bought the business with the intention of injecting substantial capital to strengthen the online retail business and to look for opportunities to expand the brand geographically. The acquisition was expected to be timed to capitalise on a forecast a revival in the luxury retail segment, as the US economy starts to improve.

4 Acquirer: CP ALL Public Company Limited Target: Siam Makro Public Company Limited Deal value: A$4,186m Acquirer country: Thailand Target country: Thailand Date: 26/06/2013 EV/EBITDA Multiple: 30.2x

Siam Makro Public Company Limited (Siam Makro) is a leading discount chain store in Thailand. It was acquired by CP ALL Public Company Limited (CP), which operates thousands of 7-Eleven stores in Thailand. The acquisition was undertaken in order to strengthen CP’s portfolio at a time when the sector was expected to benefit from government measures to spur consumption in Thailand. CP also planned to expand Siam Makro throughout Southeast Asia, China and Pakistan. The business was purchased at a premium transaction multiple of 30.2x on the expectation of strong growth opportunities for the business in South East Asia.

5 Acquirer: Alimentation Couche-Tard Inc. Target: Statoil Fuel & Retail ASA Deal value: A$3,463m Acquirer country: Canada Target country: Norway Date: 19/06/2012 EV/EBITDA Multiple: 6.7x

Alimentation Couche-Tard Inc. (Couch-Tard) is a large independent convenience store operator in North America. Statoil Fuel & Retail ASA (Statoil Fuel & Retail) is a leading convenience and fuel retailer in the high growth markets of Central and Eastern Europe. Couch-Tard planned to leverage its experience in the North American convenience store market to enhance Statoil Fuel & Retail’s retail business. The acquisition also provided Couch-Tard with greater diversification and an entry platform into the European market at a time when market conditions were expected to be improving.

Large retail businesses are looking for opportunities to expand their businesses internationally.

*Where deal values are available


Top 10 international deals*

1 Acquirer: Loblaw Companies Limited Target: Shoppers Drug Mart Corporation Deal value: A$14,324 million (m) Acquirer country: Canada Target country: Canada Date: 28/03/2014 EV/EBITDA Multiple: 11.1x

Loblaw Companies Limited (Loblaw), a subsidiary of George Weston Limited, is one of Canada’s largest food retailers and a leading provider of drugstore, general merchandise and financial products and services. Shoppers Drug Mart Corporation was the licensor of full service retail drug stores. The acquisition strengthened Loblaw’s market position in the growing health, wellness and nutrition sectors of the market. The acquisition was also expected to yield annual cost synergies of $300m within three years.

2 Acquirer: Temasek Holdings Pte. Target: Olam International Ltd. Deal value: A$11,758m Acquirer country: Singapore Target country: Singapore Date: 23/05/2014 EV/EBITDA Multiple: 11.6x

Temasek Holdings Pte. is a Singaporean government owned investment firm. Temasek Holdings acquired an additional 75% stake in Olam, one of the world’s largest suppliers of cocoa, coffee and nuts and also one of the largest cotton companies. Temesak was seeking to capitalise on the expected increase in global demand for food.

3 Acquirer: Ares Management LLC; Canada Pension Plan Investment Board Target: Neiman Marcus Group LTD LLC Deal value: A$6,657m Acquirer country: United States Target country: United States Date: 25/10/2013 EV/EBITDA Multiple: NA

Neiman Marcus Group Ltd LLC (Neiman Marcus) is one of the largest luxury, department store retailers in the US. It also operates a high end, online retailing division. The two PE funds bought the business with the intention of injecting substantial capital to strengthen the online retail business and to look for opportunities to expand the brand geographically. The acquisition was expected to be timed to capitalise on a forecast a revival in the luxury retail segment, as the US economy starts to improve.

4 Acquirer: CP ALL Public Company Limited Target: Siam Makro Public Company Limited Deal value: A$4,186m Acquirer country: Thailand Target country: Thailand Date: 26/06/2013 EV/EBITDA Multiple: 30.2x

Siam Makro Public Company Limited (Siam Makro) is a leading discount chain store in Thailand. It was acquired by CP ALL Public Company Limited (CP), which operates thousands of 7-Eleven stores in Thailand. The acquisition was undertaken in order to strengthen CP’s portfolio at a time when the sector was expected to benefit from government measures to spur consumption in Thailand. CP also planned to expand Siam Makro throughout Southeast Asia, China and Pakistan. The business was purchased at a premium transaction multiple of 30.2x on the expectation of strong growth opportunities for the business in South East Asia.

5 Acquirer: Alimentation Couche-Tard Inc. Target: Statoil Fuel & Retail ASA Deal value: A$3,463m Acquirer country: Canada Target country: Norway Date: 19/06/2012 EV/EBITDA Multiple: 6.7x

Alimentation Couche-Tard Inc. (Couch-Tard) is a large independent convenience store operator in North America. Statoil Fuel & Retail ASA (Statoil Fuel & Retail) is a leading convenience and fuel retailer in the high growth markets of Central and Eastern Europe. Couch-Tard planned to leverage its experience in the North American convenience store market to enhance Statoil Fuel & Retail’s retail business. The acquisition also provided Couch-Tard with greater diversification and an entry platform into the European market at a time when market conditions were expected to be improving.

Large retail businesses are looking for opportunities to expand their businesses internationally.

*Where deal values are available


6 Acquirer: Bain Capital Private Equity (Bain) Target: Skylark Co., Ltd. Deal value: A$3,303m Acquirer country: United States Target country: Japan Date: 30/11/2011 EV/EBITDA Multiple: NA

Skylark Co. Ltd (Skylark) is a Japanese restaurant chain operating approximately 3,500 restaurants under 48 brand names, including Kozo Sushi Chain and Gusto. The restaurant chain is positioned to take advantage of the slow economic growth in Japan, as consumers look for value options. Bain intended to further expand the business in Japan and look for opportunities to diversify the business outside Japan. Bain has also invested in other restaurant businesses globally, including in Domino’s Pizza, Burger King and Dunkin’ Brands.

7 Acquirer: Albertsons, LLC Target: New Albertson’s, Inc. Deal value: A$3,120m Acquirer country: United States Target country: United States Date: 21/03/2013 EV/EBITDA Multiple: NA

Albertsons LLC (Albertsons) acquired five supermarket chains operating under different banners from a wholly owned subsidiary of Supervalu. The 877 stores acquired were complementary to Albertson’s existing operations, which are focused on traditional grocery retail. Albertson planned to invest in the stores to improve operations and grow revenues. The business was sold by Supervalu, who was restructuring its business in response to the difficult retail conditions, which had placed financial pressure on the company.

8 Acquirer: Leonard Green & Partners, L.P.; TPG Capital, L.P. Target: J. Crew Group, Inc. Deal value: A$3,074m Acquirer country: United States Target country: United States Date: 07/03/2011 EV/EBITDA Multiple: 8.4x

J.Crew Group Inc. (J.Crew) is a multi-channel retailer of women’s, men’s and children’s apparel, shoes and accessories and had 246 stores in the US at the time of the transaction. The business was bought by two PE funds that already had significant holdings in the retail sector. The investors saw the potential to capitalise on J.Crew’s strong brand and multi-channel strategy to further expand the business, both in the US and internationally.

9 Acquirer: Golden Agri-Resources Ltd Target: PT Sinarmas Distribusi Nusantara (SDN) Deal value: A$3,071m Acquirer country: Singapore Target country: Indonesia Date: 02/06/2014 EV/EBITDA Multiple: NA

SDN primarily operates as a distributor of fast moving consumer products. Golden-Agri Resources is the world’s second largest palm oil plantation company; it cultivates, harvests and refines crude palm oil into products such as cooking oils and margarine.

10 Acquirer: Hudson’s Bay Company Target: Saks Incorporated Deal value: A$2,963m Acquirer country: Canada Target country: US Date: 04/11/2013 EV/EBITDA Multiple: 10.2x

Hudson’s Bay Company (Hudson’s Bay) is a large mid-market Canadian department store chain. Saks Incorporated (Saks) is one of the most well recognised luxury retailers in the US. Hudson’s Bay acquired Saks because its strong, unique brand would add a luxury dimension to Hudson’s Bay’s lower priced stores. Hudson’s Bay also planned to expand Saks into Canada and to continue to roll out Saks’s outlets across the US.

Private Equity firms were the buyers in 30% of the largest transactions.

Sources: S&P Capital IQ, Mergermarket

NA: Not available

Consumer goods Online retail Distributors/WholesalersFood retail Large retail stores 4321 9876 5012 9900

CreditCard BANK

VALIDFROM 12/12 EXPIRES

END 09/16

Mr J Smith

Dealtracker for the retail industry 56 Acquirer: Bain Capital Private Equity (Bain) Target: Skylark Co., Ltd. Deal value: A$3,303m Acquirer country: United States Target country: Japan Date: 30/11/2011 EV/EBITDA Multiple: NA

Skylark Co. Ltd (Skylark) is a Japanese restaurant chain operating approximately 3,500 restaurants under 48 brand names, including Kozo Sushi Chain and Gusto. The restaurant chain is positioned to take advantage of the slow economic growth in Japan, as consumers look for value options. Bain intended to further expand the business in Japan and look for opportunities to diversify the business outside Japan. Bain has also invested in other restaurant businesses globally, including in Domino’s Pizza, Burger King and Dunkin’ Brands.

7 Acquirer: Albertsons, LLC Target: New Albertson’s, Inc. Deal value: A$3,120m Acquirer country: United States Target country: United States Date: 21/03/2013 EV/EBITDA Multiple: NA

Albertsons LLC (Albertsons) acquired five supermarket chains operating under different banners from a wholly owned subsidiary of Supervalu. The 877 stores acquired were complementary to Albertson’s existing operations, which are focused on traditional grocery retail. Albertson planned to invest in the stores to improve operations and grow revenues. The business was sold by Supervalu, who was restructuring its business in response to the difficult retail conditions, which had placed financial pressure on the company.

8 Acquirer: Leonard Green & Partners, L.P.; TPG Capital, L.P. Target: J. Crew Group, Inc. Deal value: A$3,074m Acquirer country: United States Target country: United States Date: 07/03/2011 EV/EBITDA Multiple: 8.4x

J.Crew Group Inc. (J.Crew) is a multi-channel retailer of women’s, men’s and children’s apparel, shoes and accessories and had 246 stores in the US at the time of the transaction. The business was bought by two PE funds that already had significant holdings in the retail sector. The investors saw the potential to capitalise on J.Crew’s strong brand and multi-channel strategy to further expand the business, both in the US and internationally.

9 Acquirer: Golden Agri-Resources Ltd Target: PT Sinarmas Distribusi Nusantara (SDN) Deal value: A$3,071m Acquirer country: Singapore Target country: Indonesia Date: 02/06/2014 EV/EBITDA Multiple: NA

SDN primarily operates as a distributor of fast moving consumer products. Golden-Agri Resources is the world’s second largest palm oil plantation company; it cultivates, harvests and refines crude palm oil into products such as cooking oils and margarine.

10 Acquirer: Hudson’s Bay Company Target: Saks Incorporated Deal value: A$2,963m Acquirer country: Canada Target country: US Date: 04/11/2013 EV/EBITDA Multiple: 10.2x

Hudson’s Bay Company (Hudson’s Bay) is a large mid-market Canadian department store chain. Saks Incorporated (Saks) is one of the most well recognised luxury retailers in the US. Hudson’s Bay acquired Saks because its strong, unique brand would add a luxury dimension to Hudson’s Bay’s lower priced stores. Hudson’s Bay also planned to expand Saks into Canada and to continue to roll out Saks’s outlets across the US.

Private Equity firms were the buyers in 30% of the largest transactions.

Sources: S&P Capital IQ, Mergermarket

NA: Not available

Consumer goods Online retail Distributors/WholesalersFood retail Large retail stores 4321 9876 5012 9900

CreditCard BANK

VALIDFROM 12/12 EXPIRES

END 09/16

Mr J Smith


FEATURE


Green says: “The organic food market

is expected to grow 10 per cent to 15 per

cent per year as consumers increasingly

realise the health benefits of clean

food and the premium price over

conventional food narrows. At AboutLife,

we focus on creating an attractive and

authentic shopping experience with a

deep range of products where we can

educate customers on the benefits of

clean eating.”

George Pezaros of Degari Bakery Cafe

credits his company’s private equity

investors NBC Capital with improving “back

of house operations”.

He says: “They have put the right tools

in place to prepare our business for our

next progressive growth phase. We also

expect to benefit from their merchandising

and management experience as we

continue to grow.”

The report predicts that as retail

conditions slowly improve the level of retail

M&A deals in Australia will also increase.

It notes as positive signs the acquisition

(from The Riverside Company) of a

majority stake in Retail Zoo – the owner

of Boost Juice – by US private equity firm

Bain Capital; the IPO of Beacon Lighting;

the listing on the AIM board of the

London Stock Exchange of e-commerce

business Mysale; and South African retailer

Woolworth’s takeover offers for David


Globally, private equity firms were active

in 15 per cent of total retail transactions

and these were weighted toward larger

transactions.

Of 633 deals in which private equity

firms were involved, they were buyers in 37

per cent, sellers in 41 per cent and were on

both sides in 22 per cent.

Of 4,328 M&A retail transactions globally,

Australia accounted for 114 deals.

FEATURE


The UK’s Start Up Loans Company is

barely two years old. A government-

backed and private sector-supported

initiative, Start Up Loans provides early

stage businesses with repayable loans

along with the services of business

mentors.

Such is the demand for seed capital,

Start Up Loans had channelled £98m to

19,600 businesses as this article was being

written. That meant funding had been

provided to an average of 41 businesses a

day and there was no sign of that outflow

reducing. Incidentally, roughly a third of

the businesses being funded are run by

women.

Start Up Loans has so far performed

under budget and above target with

the result that the government recently

increased its financial backing.

Start Up Loans is just one of several

UK government initiatives that seek to

promote the growth of new, mainly high

tech, businesses. For example, in its latest

budget the government – determined

to create an economic landscape that

facilitates the growth of new businesses

– rewrote the tax laws to encourage the

establishment of venture capital trusts.

Venture capital trusts are designed to

encourage investment in small unlisted

companies. Their big attraction is that

individual investors gain hefty tax relief

as compensation for providing capital.

For instance, investors can claim front-

end income tax relief on investments of

up to £200,000. They are also exempt

from income tax on dividends payable

on ordinary shares acquired for up to

£200,000, and exempt from capital gains

tax on disposal of those shares.

These venture capital trusts, which each

invest in a portfolio of start-ups, are one

of several measures the government has

adopted – or developed further – to plug

the so-called equity gap faced by early-

stage businesses. The investment range for

these trusts starts at around £50,000 and

tops out at £2m.

UNLOCKING CAPITAL

Hailed by venture capitalists, angel

groups and individual investors as

a breakthrough, these measures

are, collectively, by far the most

comprehensive efforts undertaken by a

UK government to encourage venture

capital investment and other forms of

risk capital. The main initiatives are the

Enterprise Investment Scheme, the Seed

Investment Scheme and the Venture

Capital Trust Scheme.

Although these schemes differ in detail,

they share the underlying objective of

unlocking investment capital by allowing

generous tax relief to counterbalance the

risk that is typically involved with early-

stage plays. Take the often contentious

issue of capital gains tax. In the latest

budget the government has bitten the

bullet and allowed any investors making

capital gains under one scheme to book

50 per cent relief if they reinvest these

profits. Effectively, investors are now able

to buy shares at half price.

The main aim is to release a flood of

hitherto investment-shy, sleeping capital.

For example, if a reasonably high net

worth individual with an income tax

liability of £50,000, plus deferred capital

gains of £100,000, were to reinvest the

latter under the Seed Investment Scheme,

he would wipe out all his income tax

liability and reduce his capital gains tax

obligations to just £14,000.

And it gets better. If the investment

turns out to be moderately successful and

UK BACKS HIGH TECHTO LEAD RECOVERY

BY EUROPEAN CORRESPONDENT SELWYN PARKER

THE INNOVATION INVESTMENT

FUND (IIF) PROGRAM WAS

ABOLISHED IN THIS YEAR’S

BUDGET BUT IN THE UK A

SIMILAR PROGRAM IS JUST

GETTING UP TO SPEED AMONG

A RAFT OF GOVERNMENT

INITIATIVES DESIGNED TO

USE HIGH TECH BUSINESSES

GROWTH TO PULL THE

COUNTRY OUT OF RECESSION.

FEATURE


returns £125,000 after three years (25 per

cent), there is no capital gains tax liability.

Allowing for all the write-offs, the net cost

of the investment over the entire period

would be £36,000. The overall return

works out at 3.5 times net cost.

At the same time as rewriting the rules

for capital raising by small early-stage

businesses, the coalition government is

also providing backing for bigger-budget

start-ups. It has fine-tuned a number of

schemes that support such companies with

taxpayers’ funds. The Enterprise Finance

Guarantee, for example, now provides up

to ten-year loans of between £1,000 and £1

million – four times greater than previously

– to businesses with a turnovers of up to

£25 million – five times higher than before.

The government guarantees up to 75 per

cent of such loans.

These loans also serve to plug the

gaping hole left by the banks which have

cut off the supply of senior debt on which

many companies relied to fund expansion.

HIGH TECH TARGETS

The government’s main target area is

overwhelmingly young businesses in the

high-tech sector. Investing alongside the

private sector on a pari passu basis, the

Innovation Investment Fund has about

£150 million to invest in start-ups and

spin-outs. Nothing if not ambitious, the

government believes the initial £150 million

– in effect, seed capital – can be leveraged

with private sector commitment into a £10

billion fund by around 2025.

On top of central government support,

a number of regions run their own early-

stage, mainly high-tech, funds. These can

pump up to £100,000 into knowledge-

intensive start-ups and are in great

demand. A general provision of these

schemes, however, is that public funding

must at least be matched by private sector

funding.

In other ways beside finance, UK Inc is

pulling out all the stops to facilitate new

companies. According to UK Business

Incubation, a government-funded body

that offers plug-and-play, low-cost office

space and other virtually zero-expense

facilities, there are now over 300 of these

co-working space hubs across the country.

Between them, they support at the latest

count over 12,000 fledgling businesses

across all sectors.

The most aggressive pursuer of early-

stage companies is, however, the capital

city. Perhaps the most high-tech hungry

city in Europe, London now bends over

backwards to attract new companies,

particularly to the fast-growing hub of

Shoreditch where most of the digital

giants are gathered. The City of London

Corporation’s Innovation Warehouse offers

free or subsidised office space as well

as connections with business angels and

established entrepreneurs in a high-tech

hotbed.

Central and local government in the UK

all recognise the promotion of innovation

as a key to developing new industries.


REARVIEW MIRROR

5 YEARS AGO... SEPTEMBER 2009ANZ DIVESTS ALTERNATIVE ASSETS BUSINESS

The sale of ANZ Bank’s ANZ Infrastructure

Services (ANZIS) business to a private

consortium has been completed.

ANZ’s divestment of the business reflects

the focus on core retail and business

banking areas that chief executive Mike

Smith has pursued since his appointment

in late 2007. Similarly, ANZ has pared back

the operations of ANZ Private Equity.

The new ANZIS ownership consists

managing director John Clarke (45 per

cent), interests associated with Mike

Fitzpatrick (45 per cent) and Les Fallick (10

per cent).

Mr Fitzpatrick is the founder of

Hastings Funds Management which is

now fully owned by Westpac. Mr Fallick

is the founder of Principle Advisory

Services, placement agent and advisor to

institutional investors.

Mr Clarke previously held a 20 per cent in

ANZIS with the remainder owned by ANZ.

ANZIS has developed a specialist

advisory and investment business across

all sectors of the energy, infrastructure

and utilities markets. The business has

more than $1 billion in funds under

management in funds such as the Energy

Infrastructure Trust and the Diversified

Infrastructure Trust.

The business is to be renamed

Infrastructure Capital Group (ICG). Mr

Fitzpatrick will be chairman with Mr Clarke

remaining managing director.

Mr Clarke said the new name would help

establish the business as an independent,

specialist funds management company

which would provide wholesale investors

with team continuity, strong origination

capabilities, detailed knowledge of

portfolio assets and a strong investor-value

focus.

“The new ownership also provides ICG

with additional infrastructure market

experience and credibility and strong

financial commitment to the success of the

funds,” Mr Clarke said.

Mr Fitzpatrick said he had been

impressed with the development of the

ANZIS business, in particular in power

generation and green energy.

10 YEARS AGO... SEPTEMBER 2004WOLSELEY PARTNERS BECOMES PRIVATE EqUITY MANAGER

Sydney based Wolseley Partners is in

the process of making the transition

from corporate advisory firm to private

equity manager, which if successful

will make it one of the very few new

wholesale fund managers to emerge in

recent times.

Joint managing director, James Todd,

said Wolseley has been thinking about the

move for three years and in July this year,

after six months of preparation, it issued a

private placement memorandum to raise

$150 million for the Wolseley Partners Fund

2004, L.P.

Mark Richardson, also joint managing

director, said the Fund now has committed

investors and he is confident of closing the

fund this calendar year.

Although there has been no interim

close, the Fund is capable now of

executing investments, effectively putting

Wolseley Partners into business as a

manager.

The mid-market buyout fund is targeting

Australian and New Zealand businesses

with an enterprise value of between $20

million and $80 million and earnings of $4

million to $20 million.

It is seeking six to 12 such businesses,

and will make an average equity investment

of $15 million. Its strategy is to achieve

an internal rate of return (IRR) of 30 per

cent per annum and above and a return of

300 per cent or more on total capital.

In terms of track record, Wolseley

says that as a corporate advisor it has

sourced and helped manage private equity

investments worth $26.7 million and these

have given an IRR of 52 per cent to its

coinvestors. One of these was Transonic

which recently completed a successful IPO

that saw ABN AMRO exit with an IRR of 108

per cent. Another successful deal is Stream.

Mr Richardson said that while Wolseley

Partners had a hands on role as a corporate

adviser, it has now moved to an active

oversight role as a funds manager. As a

control investor, it will provide companies

with active strategic, financial and

operational assistance over a three to five

year investment period.

The Fund’s focus is on the

manufacturing, distribution and service

sectors and ‘bankable’ chief executives.

Mr Richardson said Wolseley already has

“plenty of dealflow”. The Fund will make

this more efficient and allow Wolseley to

move more quickly.

Wolseley also intends to be proactive in

seeking deals, with Mr Todd pointing out

that there are 11,000 businesses in Australia

with a turnover of $10 million or more.

The fund and team

The 10 year Fund is structured as a Venture

Capital Limited Partnership (VCLP) and

a unit trust for non-VCLP complying

investments.

The minimum investment is $1 million,

and the three general partners have

committed a total of $3 million.

The management fee is 2 per cent per

annum, offset by any external fees earned.

The performance fee is 20 per cent with

catch-up after an 8 per cent preferred return.

As well as Messrs Todd and Richardson,

the founders of Wolseley Partners, the third

managing director is Peter Hasko, who

joined Wolseley in 2003. Mr Hasko has 25

years experience in senior management

and private equity, including most recently

with Pacific Equity Partners. He has also

worked with a number of venture capital

industry investees including Frucor and

Beeline Technologies.


REARVIEW MIRROR

* To access all editions of Australian Private Equity & Venture Capital Journal since July 1992, convert to our Archive Subscription. Short term – 30 day – Archive Subscriptions are also available.

20 YEARS AGO... SEPTEMBER 1994STATE SUPER INCREASES PRIVATE EqUITY INVOLVEMENT

One of Australia’s largest investors in

alternative assets, State Super Corporation,

has increased the size of its private equities

team from two to five members as part of

a strategy to ensure that it is well placed

to take advantage of what it describes as

“significant investment opportunities which

this relatively under-utilized asset class can

provide.”

State Super currently has $350 million

or 2.5 per cent of its $14 billion of assets in

private equity and sees this asset class as

being able to provide an investment edge

between funds managers.

“Private equity is essentially an asset

class which more than pays its way yet

it has not enjoyed the same popularity

in Australia as it has overseas,” said Ms

Elizabeth Bryan, State Super’s general

manager, investments.

Ms Bryan previously spent seven

years with AIDC as general manager,

development investment.

State Super has appointed David Shields,

previously from AIDC, as head of the

private equities portfolio. The enlarged

team is structured into three areas:

• Direct investment in developing

companies, headed by Martin Smith.

• Development capital funds, headed by

Peter Dowding, previously from AIDC.

• Infrastructure investment, headed by

Felicity Gates, previously from Bankers

Trust.

The fifth member of the team is Kaveh

Jahromi.

Ms Bryan said “Not many institutions

have such an organized or focused

approach to private equity, and certainly

they don’t have such an actively hands-on

unit.”

“Private equity is active investment,

and to be successful funds managers need

to have the resources to carry this out,”

she said.

“These kinds of investments require

independent analysis, appraisal and due

diligence. They need to be monitored on

an ongoing basis and we need to be able

to nominate our own directors. It is active

involvement, every day, and through our

participation and input, that we can add

value to these investments for the benefit

of our own members,” said Ms Bryan.

State Super has changed its balance

date from March 31 to June 30. Its 15

month results should be available in early

November.

PORTFOLIO MOVES

The major review of State Super’s

development capital portfolio over the past

18 months has resulted in a good deal of

reorganization and rationalization, said Mr

Smith.

Investments which have been exited

include Australian Development Capital

Fund, Australian Innovation Ltd, Command

Pacific and Ramtron International.

A 3 per cent holding that was previously

managed elsewhere has been brought into

the portfolio.

BERKELEY MEDICAL INVESTMENTS LTD

State Super says its investment in Berkeley

Medical Investments Ltd has performed

“extremely well and has crystallized

significant returns.” Berkeley is a managed

fund which operates out of San Francisco.

It invests in up and coming medical

technology businesses such as companies

that are developing new kinds of surgical

instruments or new diagnostic techniques,

and guides them through to sale or stock

exchange listing. State Super has a 40 per

cent share in Berkeley.

JAMISON

Since last year State Super’s holding in

Jamison Equity has risen by 1 per cent to

14 per cent. State Super says that its “net

asset value of the investment has increased

significantly since its initial investment

in 1990.”

The non-executive chairman is John

Ward, a former chief executive of QANTAS

and general manager commercial with

News Ltd. Four of five other executive

positions have also been filled, with Sharen

Page as manager - Administration and

Projects and Mario Poli as analyst.


COMING EVENTS

3 SEPTEMBER

BIOBRIEFING – VIDEO GAMES:

THE FUTURE TREATMENT OF

NEUROLOGICAL & PSYCHIATRIC

CONDITIONS.

Melbourne. BioMelbourne Network.

www.biomelbourne.org/events

3-4 SEPTEMBER

AVCAL ALPHA.

Melbourne. AVCAL.

www.avcal.com.au

8-10 SEPTEMBER

ACCOUNTING FOR TURNAROUND.

CTPA Course through the University of

Technology, Sydney.

Sydney. Turnaround Management

Association of Australia.

www.turnaround.org.au/whats-on.php

10 SEPTEMBER

Sydney. Australian Museum.

http://australianmuseum.net.au/event/

eureka-prizes

16 SEPTEMBER

BIOBREAKFAST – PHOSPHAGENICS:

DEVELOPING A MULTI-FACETED

PLATFORM TECHNOLOGY,

TPM. BioMelbourne Network.

www.biomelbourne.org/events

17 SEPTEMBER

PE 101.

Western Australia. AVCAL.

www.avcal.com.au

30-31 OCTOBER

WEB DIRECTIONS 2014.

Sydney. Web Directions.

www.webdirections.org

4-5 DECEMBER

YOW! CONFERENCE (SOFTWARE

DEVELOPER EVENT).

Melbourne. Slattery IT.

www.slatteryit.com.au

8-9 DECEMBER


DEVELOPER EVENT).

Brisbane. Slattery IT.


11-12 DECEMBER


DEVELOPER EVENT).

Sydney. Slattery IT.


17-19 SEPTEMBER

TMA 2014 NATIONAL CONFERENCE

& GALA DINNER.

Sydney. Turnaround Management

Association of Australia.

www.turnaround.org.au/whats-on.php

19 SEPTEMBER

THE SUNRISE – THE RE-TELLING OF

THE EARLY YEARS OF AUSTRALIA’S

ICONIC START-UPS.

Sydney. Startmate and Blackbird Ventures.

thesunrise.co

2 OCTOBER

PE 101.

Queensland. AVCAL.

www.avcal.com.au

16 OCTOBER

GROWTH COMPANY AWARDS

PRESENTATION.

Sydney. Australian Growth Company

Awards.

www.sparke.com.au

23 OCTOBER

TECH23.

Sydney. Slattery IT.


23 OCTOBER

NZVCA ANNUAL PRIVATE

EQUITY & VENTURE CAPITAL

CONFERENCE 2014.

Queenstown. NZVCA

www.nzvca.co.nz


ShARE ChART

LAST SALE AT END OF MONTH AUSTRALIAN LISTED PRIVATE EqUITY FUNDS/ INVESTMENT COMPANIES

INVESTORS/ MONTH Aug-14 Jul-14 Jun-14 May-14 Apr-14 Mar-14 Feb-14 Jan-14 Dec-13 Nov-13 Oct-13 Sep-13

PRIVATE EqUITY & VENTURE CAPITAL FUNDS/ INVESTORS

A1 Investments & Resources (ASx: AYI) 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.002 0.003

Acrux (ASx: ACR) 1.975 1.835 1.005 0.870 1.035 1.72 2.100 2.350 2.22 2.510 2.680 3.300

Arowana International Ltd (ASx: AWN) 0.980 0.915 0.902 0.900 0.890 0.785 0.600 0.450 0.48 0.540 0.480

Authorised Investment Fund (ASx: AIY) 0.028 0.028 0.025 0.020 0.026 0.026 0.029 0.029 0.026 0.026 0.033 0.040

Biotech Capital (ASx: BTC) 0.051 0.026 0.025 0.020 0.023 0.025 0.021 0.018 0.025 0.025 0.024 0.022

Billabong International (ASx: BBG) (Centrebridge Partners/ Oaktree Capital)

0.540 0.535 0.500 0.485

Blue Sky Alternatives Access Fund (ASx: BAF)

0.980 0.990 0.990

Blue Sky Alternative Investments (ASx: BLA)

2.870 2.91 2.950 2.500 2.340 2.400 2.090 2.190 1.610 1.930 1.450 1.390

BPH Energy Ltd (ASx: BPH) 0.010 0.009 0.008 0.009 0.008 0.010 0.012 0.011 0.013 0.013 0.013 0.013

Bravura (ASx: BVA) (Ironbridge Capital)

delisted

delisted

delisted

delisted

delisted

delisted

delisted

delisted

delisted

delisted

delisted 0.275

Burson Group (ASx: BAP) (quadrant Private Equity)

2.300 2.24 2.120 1.940

Chandler Macleod (ASx: CMV) (Lazard Australia Private Equity)

0.415 0.330 0.330 0.335 0.415 0.415 0.410 0.415 0.425 0.505 0.475 0.455

ClearView Wealth (ASx: CVW) (Crescent Capital)

0.885 0.800 0.800 0.820 0.760 0.735 0.700 0.660 0.610 0.605 0.655 0.590

Cover-More Group (ASx: CVO) (Crescent Capital)

2.270 1.825 1.885 2.380

CVC Limited (ASx: CVC) 1.440 1.490 1.420 1.250 1.180 1.230 1.180 1.200 1.180 1.200 1.100 1.115

Dick Smith Holdings (ASx: DSH) (Anchorage Capital)

2.280 2.020 1.960 2.150

Disruptive Investment Group (ASx: DVI) 0.008 0.010 0.014 0.016 0.190 0.250

Energy Developments (ASx: ENE) (Pacific Equity Partners)

5.150 5.000 5.190 5.060 5.200 5.160 5.500

Grandbridge (ASx: GBA) 0.044 0.044 0.033 0.060 0.060 0.064 0.064 0.045 0.045 0.045 0.040 0.050

Greencross (ASx: GxL) (TPG) 10.000 10.400 9.240

Healthscope (ASx: HSO) (Carlyle Group/ TPG Capital)

2.240 2.260

Invigor Group (ASx: IVO) 0.090 0.100 0.035 0.040 0.040 0.053 0.020 0.040 0.020 0.020 0.025 0.030

iSonea (ASx: ISN) (Bioscience Managers/ Triton Inc)

0.175 0.210 0.235 0.180 0.180 0.210 0.280 0.320

Lion Selection Group (ASx: LSx) 0.395 0.350 0.300 0.400 0.455 0.050 0.510 0.530 0.525 0.530 0.550 0.590

Mantra Group (ASx: MTR) (CVC Asia-Pacific UBS)

2.060 1.960 1.800

Metro Performance Glass (ASx: MPP NZx: MPG) (Crescent Capital)

1.590

Monash IVF Group (ASx: MVF) (Ironbridge Capital)

1.650 1.745 1.765

NSx Limited (ASx: NSx) 0.067 0.100 0.100 0.115 0.170 0.170 0.170 0.110 0.140 0.150 0.135 0.150

Continued ➤


ShARE ChART

Oceania Capital Partners (ASx: OCP) 1.440 1.500 1.370 1.450 1.460 1.500 1.500 1.600 1.600 1.590 1.600 1.600

Osprey Medical (ASx: OSP) (CM Capital/ Brandon Capital/ Kinetic Investment Ptnrs)

0.570

Pioneer Credit (ASx: PNC) (Banksia Capital)

1.600 1.560 1.580

qRx Pharma (ASx: qRx) (Uniseed) 0.029 0.750 0.080 0.095 0.094 0.770 0.860

q Technology Group (ASx: qTG) (Helmsman Capital)

0.022 0.031 0.028 0.021 0.015 0.020 0.017 0.020 0.021 0.018 0.020 0.020

Speedcast (ASx:SDA) (TA Associates) 2.010

Spotless Group (ASx: SPO) (Pacific Equity Partners)

1.920 1.850 1.650 1.820

Techniche Limited (ASx: TCN) 0.890 0.088 0.770 0.064 0.650 0.070 0.094 0.070 0.670 0.069 0.081 0.070

Transpacific Industries (ASx: TPI) (Warburg Pincus, exited 2 Nov 2013)

exited exited exited exited exited exited exited exited exited exited 1.145 0.980

Veda Group (ASx: VED) (Pacific Equity Partners)

2.210 2.100 1.980 2.270

xero (ASx: xRO) (Valar Ventures/ Matrix Capital)

22.780 23.270 24.110 30.000 28.980 36.88 37.360 38.050 29.620 30.900 24.120 16.860

FUNDS OF FUNDS

IPE Limited (ASx: IPE) 0.395 0.445 0.495 0.480 0.460 0.465 0.440 0.440 0.435 0.440 0.460 0.440

Economy & Finance

Australian Private Equity & Venture Capital Journal // September 2014