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 PriceWaterhouseCoopers and AVCAL recently issued a 30 page report titled Economic Impact of Private Equity and Venture Capital in Australia 2006.
The report reads like a pre-election policy statement. It presents a brave new world vision and draws on statistics in support. It covers 900 Australian and New Zealand investee companies it says received funds in the 1999-2006 period.
As the publishers of the report aim to make it an annual event I'll share a few gripes that may lead to improvements for future reports.
It is not helpful that the report fails to state its working definition of what is "private equity" (PE) and "venture capital". AVCAL's Website does not help there as well. As a lawyer advising on business finance I can't operate without sound definitions. Terms like VC and PE are often misused and have differences in meaning in different countries. Lacking definitions the report's quoted figures and graphs slosh around unconvincingly.
A passable job (well almost) is done in stating the methodology for the survey on which the report is based. First, a questionnaire was sent to 55 Australian "PE" fund managers. Second, a group of 700 companies that had "received Australian PE funding was identified". After removing companies based outside Australia, a sample of 296 was selected for an online survey run in October-November 2006.
Fund raising success stories
The "case studies" section strikes me as the credible part of the report. I have drawn from that section to produce the table below.
In the first column I have listed each company. In the second column I have provided for each company a shortened profile and one fund raising event. Typically each company has been involved in several rounds of finance. The companies are among those who received funding during the 1999-2006 period covered by the survey. They illustrate what business finance, equity investment, ASX floats and government grants can help achieve in Australia and abroad for both investors and investees.
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Business
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Profile | Sample fund raising events
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Wizard
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Wizard Home Loans is one of Australia's leading non-bank lenders. Since 1996 it has expanded its product portfolio to include personal loans, car finance and credit cards. It operates over 250 branches in Australia.
2004 - Purchased by GE Capital for approximately A$500 million.
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SEEK
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Formed in 1997 SEEK has expanded to New Zealand and the UK.
2005 - listed on ASX
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Austal
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Austal manufactures catamarans and fast ferries with shipyards in Western Australia and Alabama.
1994 - CHAMP investors led syndicate worth $15 million in venture capital.
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Pharmaxis
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Pharmaxis is a specialist pharmaceutical company that researches, develops and brings to market human therapeutic products to treat chronic respiratory and autoimmune diseases.
2002 - Private funding of $9.6 million.
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bCODE
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bCODE Mobile Ticketing has developed an SMS text message method for providing tickets for transport, sporting, movies and other events.
2005 - Investment of $5 million by CM Capital and Innovation Capital.
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Austar
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Austar is an ASX-listed subscription television and broadband internet access provider. It has about 500,000 pay TV subscribers and 50,000 Internet and mobile telephony customers. It employs over 800 people across the Gold Coast, Sydney and Darwin.
2002 - CHAMP and its strategic partner Liberty Global Inc acquired 82% of Austar for $82 million.
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JB Hi-fi
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JB hi-Fi is a music, DVD and video game retailer with over 60 outlets.
2000 - Purchased by investors and senior management.
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Vision Group
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Vision Group is an ASX-listed provider of ophthalmic care. It employs about 320 staff in nursing, orthoptics, marketing, administration and finance, including 28 doctor partners and 50 associate and day surgery partners.
2001- Receives private equity investment of $14 million from funds managed by AMP.
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CEA Technologies
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CEA exports a range of high technology radar surveillance systems and communications systems. About 60-70% of its resources are committed to research and development.
2001 - Deutsche Asset Management invests $11 million.
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CogState
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CogState technologies are used to quantify the effect of disease and of drugs, devices or other intervention on human subjects participating in clinical trials.
2001 - Receives AusIndustry start grant of $1.4 million.
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Mincom
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Mincom is a specialist in enterprise asset management.
1997 - formed strategic relationship with Caterpillar, now principal shareholder.
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Dynamic Hearing
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Dynamic Hearing researches and develops technologies to provide better hearing.
2004 - Further investment of $3 million over 2003/04 by GBS Venture Partners and Nanyang Ventures.
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G2 Microsystems
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G2 Microsystems designs and manufacturers ultra-low-power Wi-Fi integrated circuits for the asset tracking, wireless sensor and mobile device markets.
2005 - Series a funding of $6million from DB Capital Partners and Starfish Ventures
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Intercast & Forge
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Intercast & Forge is Australia's largest independent iron foundry group.
2000 - Company formed from Australian assets of BTR, investment led by CHAMP Ventures.
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CAP-XX
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CAP-XX designs, manufacturers and sells super capacitors for portable electronic devices. R&D is conducted in concert with the CSIRO, CAP-XX is listed on the London Stock-Exchange alternative Investment Market.
2006 - Listed on London Stock Exchange AIM market raising £17 million.
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More success stories are available at AVCAL's Website. For venture capital click here and for private equity click here.
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