australian private equity & venture capital journal // february 2015

FEBRUARY 2015 · Year 24 No 249

Sale to Chinese investor achieves key exit

Loan funding challenges end $872m public to private bid

New Zealand firm invests in trans-Tasman timber pulp business

Image: oOh! Media digital advertising billboard in a

shopping centre. Story page 6.

Australian Private Equity & Venture Capital Journal FEBRUARY 2015 · Year 24 No 249 | 2

CONTENTS

EDITOR’S LETTER

Local market out of step 3

NEWS

Mobile phone services infrastructure

stake for sale 20

Medical device commercialisation

graduates win scholarships 21

NEW FUNDS & FUNDRAISING

Global IT business backs local early

stage venture firm 11

New female-focused angel fund will

seek to raise $20m 12

Private equity firm sets up fund to

invest in listed small caps 13

Canadian pension fund backs

Australian manager’s infrastructure

strategy 16

US retirement fund allocates to

Australian manager 17

PERFORMANCE

Sale to Chinese investor achieves

key exit 5

$166m float enables partial exit 6

Trade sales to provide exits for pre-

global financial crisis investments 6

Emerging markets investors to

receive strong returns from

telecoms deal 8

Dispute puts local operations of

private equity investee in

administration 10

Private equity stake reduced in

partial ASX float 10

Confectionary turnarounds end in

administration 14

US brands business buys iconic

surfwear company 20

INVESTMENT ACTIVITY

Loan funding challenges end

$872m public to private bid 5

New Zealand firm invests in trans-

Tasman timber pulp business 5

International alternative assets firm

in $1bn services spin-off 6

Sovereign wealth fund co-invests in

retirement villages 8

Corporate venturer makes cloud-

based technology investments 12

US venture firm invests in online

shoe design business 14

Lower mid-market firm invests in

Sydney bus operator 14

Global private equity firm builds on

Australian acquisition 15

Sovereign wealth fund invests in

waste gases conversion technology 15

Overseas firm moves to full

ownership of retail chain 16

US firm leads $10m investment in

cancer drug delivery system 17

$2m for commercialisation of

therapeutics development

technology 17

Produce business back in Australian

ownership 18

Mining technology and services

specialist makes first investment 20

Listed insurance broking group to

acquire rehabilitation business 22

International firm makes first

investment in Malaysia 23

PEOPLE MOVES

Former AVCAL chairman takes on

wealth management role 22

Listed equities manager appoints

former private equity figure 22

Local innovator recruits former

executive of private equity-backed

company 23

Leading investment banker

steps down 23

INFORMAL VENTURE CAPITAL

Corporate venturer backs online

neighbourhood social network 18

Investment available for advanced

manufacturing 18

New peer-to-peer lending venture

plans private capital raising 19

Accelerator to take start-ups

to China 23

COMING EVENTS

Coming Events 27

ShARES ChART

Shares Chart 28

FEATURES

REARVIEW MIRROR 25


AUSTRALIAN PRIVATE EQUITY & VENTURE CAPITAL JOURNAL

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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

We reported in December on a

surprising downturn of interest

in allocating to private equity by

Australian institutional investors.

This appears all the more surprising

compared to global trends.

A recent report by UK-based alternative

investments research company Preqin

indicates strong global interest in private

equity.

Preqin found that globally 75 per cent of

respondents were satisfied with the returns

they were receiving from their allocations

to private equity and a further 17 per cent

were more than satisfied as their returns had

exceeded expectations.

According to Preqin, of particular note

in 2014 was the improvement in venture

capital performance. Previously tarnished by

generally underwhelming returns for all but

a few managers since the dot-com bubble

burst the early 2000s, venture capital

returns registered a one year horizon IRR to

June 2014 of 25. 9 per cent, the highest of

all private equity strategies.

Some institutional investors appeared to

have taken note of this turnaround with 26

per cent of those surveyed in December

intending to commit to venture capital

vehicles in the next 12 months, a considerable

increase from 15 per cent year earlier.

Turning to the views of private equity fund

managers, surveyed by Preqin in November,

57 per cent said they had experienced

an increase in investor appetite over the

prior year. Only 12 per cent said they had

experienced a decrease.

Private equity investing in 2014 was the

strongest internationally since the global

financial crisis in 2008 but fund managers

were hoping to invest even more this year

with 55 per cent saying they expected their

investing to be up on 2014 and 35 per cent

saying they expected to invest a similar

amount to 2014.

Through 2014, $US332 billion had been

invested in buyout deals and $US86 billion

in venture capital deals.

Fundraising was seen as the biggest

challenge by managers with 31 per cent

listing it as their primary concern however

26 per cent were already in the market to

raise a new fund while 37 per cent were

planning start fundraising in 2015 and 12 per

cent had it pencilled in for 2016.

Australia is clearly out of step in attracting

new commitments to private equity from

local institutional investors. Similarly we are

out of step with our rate of investing.

But in other respects we are on trend.

Over the last 18 months or so local private

equity managers have achieved successful

exits at a dizzying pace including quite a

number which had appeared problematic

only a year or two earlier.

Interest of overseas private equity and

venture capital firms in investing in Australia

has been strong over the last 12 months

indicating that there is value in our market,

particularly in businesses which offer

exposure to growing Asian markets.

This year the focus for Australian

managers should swing back toward

investing and raising new funds. It is to be

hoped that overseas institutional investors

will see the value in investing in Australia

through local fund managers.

ADRIAN HERBERTManaging Editor, Australian Private Equity & Venture Capital Journal

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PERFORMANCESALE TO ChINESE INVESTOR bRINgS AbOUT KEy ExIT

Pacific Equity Partners (PEP) has exited

cinema operator Hoyts Group with a sale

to an investment vehicle controlled by

Chinese billionaire Sun Xishuang.

No financial details have been announced

but the deal is believed to be worth at least

$800 million.

Sun is the chairman and largest

shareholder of real estate development

and sales group Dalian Yifang Group. The

company acquiring Hoyts is British Virgin

Islands-domiciled investment fund ID

Leisure which was set up by Sun.

The deal was announced by Hoyts on 23

December.

As well as his holding in Dalian Yifang

Group, Sun is also a major shareholder

in Dalian Wanda Commercial Properties

which is majority-owned by Wang Jianlin,

China’s second richest man. In 2012 Wang

bought the second largest cinema chain

in the US, AMC Entertainment, for $US2.6

billion and has attempted to buy stakes in

US film production and studio companies

Metro-Goldwyn-Mayer and Lions Gate

Entertainment.

Hoyts Group chief executive Damian

Keogh said he was looking forward to

development of the business under its new

owners.

“Hoyts is embarking on a number of

exciting opportunities and together with

ID Leisure, we will continue to invest in the

exceptional customer experience currently

offered to 20 million attendees annually,”

he said. “Innovation and expansion will be

a focus.”

Hoyts is Australia’s second largest

cinema chain measured by the number of

screens it operates. The company also has

cinemas in New Zealand plus the Hoyts

Kiosk DVD distribution business and cinema

advertising business Val Morgan.

PEP acquired Hoyts in December 2007 in

a deal which valued the business at $440

million. The vendors were then ASX-listed

Packer family-controlled Publishing and

Broadcasting Limited and West Australia

Newspaper Holdings, now Seven West

Media (ASX: SWM).

In late 2010, (APE&VCJ, Oct 10) Hoyts

acquired Australian Multiplex Cinemas.

In 2012 Hoyts sold its Australian and

New Zealand film distribution business

to European film distributor StudioCanal

(APE&VCJ, Jul 12).

In May 2013 (APE&VCJ, Jun 13), Hoyts

accessed $US450 million on US debt

markets enabling it to refinance its debt

and pay a dividend to PEP.

In early 2014 PEP engaged investment

bank UBS AG to run a dual-track sale

process for Hoyts. An IPO had been

expected to target raising around $900

million. The exit focus is believed to have

shifted to a trade sale as the IPO market

weakened toward the end of the year.

PEP is the only Australian private equity

firm which focuses on investments around

the billion dollar mark. Little more than a

year ago the firm was holding most of the

large investments of its 2008 vintage PEP

IV fund. Since December 2013 the firm has

exited, or substantially exited, a succession

of major investments.

PEP floated Veda (ASX: VED) in

December 2013, Spotless (ASX: SPO) in

May 2014 (the largest private equity float

since TPG and Blum Capital floated Myer

in 2009) and Asaleo (ASX: AHY) in June

2014. Peters Food Group was sold to

European company R&R Ice Cream in June

2014 and Griffin’s Foods to Philippines-

based Universal Robina Corporation in

August 2014.

PEP IV still holds significant investments

in American Stock Transfer and Trust

Company, Xtralis and Link Market Services.

The firm is believed to have achieved a

first close in excess of $1 billion for PEP V

early in 2014. Total commitments of more

than $2 billion, plus around $1 billion in

co-investment capital, are believed to have

been made since then but a final close has

not been formally announced.

INVESTMENT ACTIVITyLOAN FUNdINg ChALLENgES ENd $872M PUbLIC TO PRIVATE bId

An $872.1 million private equity consortium

proposal to acquire heavy engineering

company Bradken (ASX: BKN) has been

shelved with the consortium unable to

obtain satisfactory loan funding.

Pacific Equity Partners (PEP) and Bain

Capital Asia spent months working on the

bid with Bradken during 2014.

Bradken announced on 5 December

that it had received an indicative $5.10 per

share offer from the consortium. In the

announcement Bradken also revealed that

the private equity firms had made a $6 per

share indicative offer in August. Bradken’s

board had granted due diligence then but

no firm offer had resulted.

On 11 December, Bradken reported it had

also received other acquisition enquiries

but did not give any further details.

Then on 28 January, the company

announced bid discussions had ended

because “recent volatility in global

commodity and financing markets had

impacted on the consortium’s ability

to obtain financing” on acceptable

terms. This was despite the consortium

concluding confirmatory due diligence to

its satisfaction, according to Bradken.

Newcastle-based Bradken said it

would now concentrate on returning

to profitable growth through recently

announced initiatives including acquisition

of a world class foundry in Tamil Nadu,

India, and rationalisation of overall

foundry operations. The acquisition and

rationalisation costs are to be debt funded

but are expected to cut annual costs by

$27 million by July 2015 and by $53 million

by the 2017 financial year.

INVESTMENT ACTIVTyNEW ZEALANd FIRM INVESTS IN TRANS-TASMAN TIMbER PULP bUSINESS

New Zealand’s largest private equity

manager, Maui Capital, has acquired a 50

per cent stake in trans-Tasman wood chip

and paper pulp company Pedersen Group.

The founding Pedersen family retain the

remainder of the business which is run by

second generation managing director Paul

Pedersen.

The deal was completed on 19

December. No financial have been

released.

The Rotorua-based company operates

wood chip and pulp mills in New Zealand

and Australia, a wood chip plant in Fiji

and two paper mills in Australia. Pedersen

Group employs about 180 people.

PricewaterhouseCoopers New Zealand

investment banking arm served as financial

advisor to Pedersen on the deal.


The investment is from Maui’s second

fund, Maui Capital Aqua which raised

$NZ250 million in 2012.

The firm’s first fund, Maui Capital Indigo,

raised a similar sum in 2008 and has since

been fully invested.

INVESTMENT ACTIVITyINTERNATIONAL ALTERNATIVE ASSETS FIRM TO INVEST IN $1bN SPIN-OFF

International alternative assets manager

Apollo Global Management (NYSE: APO)

is to take a half-stake in the spin-off of

services operations of Leighton Holdings

(ASX: LEI).

The deal, announced on 17 December,

values the businesses at $1.075 billion.

Thiess Services and Leighton

Contractors Services are to be merged

in the spin-off. Thiess Services includes

communications, energy solutions,

asset and infrastructure services and

environmental services divisions.

Leighton Contractors Services includes

Visionstream and an infrastructure

services division. Apollo and Leighton

Holdings will each hold 50 per cent of the

new entity, The Services Business.

Leighton Holdings is to receive about

$700 million in cash from the deal which it

will apply to reduce its debt.

The company has been seeking to

reduce debt and simplify its operations

since Spanish-controlled Hochtieff took

control in March 2004. Leighton Holdings

also announced in December that it was

selling its John Holland construction

business to China Communications

Construction Company.

Senior partner, and head of Asia Pacific

for Apollo, Steve Martinez said the funds

manager looked forward to working with

The Services Business team to grow a

world-class company providing industrial

and civil services.

Leighton Holdings executive chairman

and chief executive, Marcelino Fernándes

Verdes, said the decision to spin off the

services businesses would maximise

opportunities in the growing industrial and

civil infrastructure services sector.

“By choosing to partner with funds

managed by Apollo, a leading global

investment management firm, we gain

access to Apollo’s expertise in creating a

single, integrated and efficient business

which will be better able to compete in the

Australian marketplace,” he said.

The deal would enable Leighton

Holdings to maintain exposure to the

growing services market with its longer-

term contracts and steady cash flows,

he added.

Leighton Holdings said The Services

Business will be one of the largest services

operations in Australia with annual revenue

of more than $2.2 billion and work in

hand worth about around $4 billion. The

business will have a skilled workforce of

about 6,400.

The Services Business will provide

operational maintenance, design and

construction, remediation, and asset and

facilities management services to clients

across the resources, telecommunications,

transport, energy, water, health and

industrial sectors.

Completion of the deal is subject to

regulatory approvals including from the

Foreign Investment Review Board and New

Zealand’s Overseas Investment Office.

Apollo has one other significant

Australian investment, Nine Entertainment,

which is valued at around $400 million.

Apollo had assets under management of

about $US164 million as at 30 September

spread across private equity, credit and

real estate funds.

PERFORMANCE$166M OUTdOOR AdVERTISINg FLOAT ENAbLES PARTIAL ExIT

CHAMP Private Equity has sold down its

stake in outdoor advertising company

oOh!Media from 75.7 per cent to 32.2 per

cent (48.3 million shares) in an IPO.

About 86.1 million shares (57.8 per cent)

were offered at $1.93 cents a share raising

$166.1 million.

The enterprise value of $365.5 million

at the offer price represented 9.1 times

the 2014 calendar year forecast earnings

before interest, tax, depreciation and

amortisation (EBITDA).

The company was listed on the ASX

on 17 December as OOH!Media Limited

(ASX: OML).

OOH!Media continues to be led by

founder and chief executive Brendon Cook.

CHAMP remains the largest shareholder

retaining its reduced stake under voluntary

escrow.

Advertising and marketing services

business WPP, which sold down from

20.3 per cent to 12.9 per cent, is also

retaining its stake under voluntary escrow.

Management shareholders sold down

their combined 4 per cent stake to

2.1 per cent in the float.

CHAMP and WPP will be able to dispose

of up to 25 per cent of their remaining

shares after the company releases half-

year results to the end of June 2015.

The shares opened on the ASX at

$1.80, a 6.7 per cent discount to the offer

price and, despite a subdued market

closed at $2.05 on 30 Jan.

CHAMP bought a 9.01 per stake in

then ASX-listed oOh!Media in late 2011

(APE&VCJ, Dec 11). The private equity

firm acquired the rest of the company’s

shares in early 2012 and then privatised

the business.

In late 2012 (APE&VCJ, Nov 12)

CHAMP bought Ten Network Holdings’

(ASX: TEN) outdoor advertising business

EyeCorp for $113 million with payment

of up to $15 million of that price deferred

for three years. EyeCorp was then

merged with oOh!Media to create a

company which is now the market leader

by revenue in Australia’s out of home

advertising media sector. OOH!Media is

a leader in digital innovation in outdoor

advertising. Digital innovation is expected

to significantly increase outdoor

advertising’s share of the total Australian

advertising market which is worth

$13.4 billion annually.

PERFORMANCETRAdE SALES TO PROVIdE ExITS FOR PRE-gLObAL FINANCIAL CRISIS INVESTMENTS

International trade sales will enable Lazard

Private Equity Australia and Navis Capital

to complete exits of substantial assets

acquired before the 2008 global financial

crisis (GFC).

Japanese company Recruit Holdings

is to acquire recruitment companies

Chandler Macleod Holdings (ASX: CMG)

and Peoplebank, respective investees of the

private equity firms.

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Recruit is Japan’s largest recruitment

business and one of the world’s largest. The

company is pursuing a strategy of

international expansion, mainly by acquisition,

with the objective of making it the global

leader in its space within five years.

Recruit says both companies will

continue to operate independently.

Lazard Carnegie Wylie, Lazard Private

Equity Australia’s parent company, is one

of the largest shareholders in Chandler

Macleod with a 12.36 per cent stake having

sold down from 43 per cent in 2013.

Chandler Macleod announced on 14

January that it had entered into a scheme

implementation deed with Recruit for

Recruit to acquire the company for

$290.4 million (53 cents a share) cash via

a scheme of arrangement. A scheme of

arrangement requires more than 75 per

cent of shareholder votes to be cast in

favour of the acquisition. A vote has been

scheduled for March.

The deal will involve Recruit taking over

Chandler Macleod’s debt which amounted

to $76.19 million as at 30 June 2014.

Chandler Macleod has reported it

has made progress under a turnaround

strategy over the past few years. Difficult

trading conditions in the 2014 financial

year, however, saw underlying after tax net

profit fall 22 per cent to $14.2 million with

underlying earnings before interest, tax,

debt and amortisation (EBITDA) down 11

per cent to $40.2 million.

Announcement of the deal saw Chandler

Macleod’s shares jump from 29 cents to the

offer price. They closed just above the offer

price at 53.5 cents on 30 January.

Recruit’s corporate adviser on the

Chandler Macleod acquisition is Greenhill

Australia and its legal adviser Baker &

McKenzie. Chandler Macleod’s corporate

adviser is Moelis & Co Australia with

Herbert Smith Freehills acting as legal

adviser.

Lazard Private Equity Australia acquired

a 43 per cent stake in Chandler Macleod in

2008. In March 2013, the private equity firm

sold down its stake to 14.43 per cent selling

90 million shares to institutions and high

net worth investors for $50 million.

Recruit is to make a full acquisition

of Navis investee Peoplebank for $68.6

million. Peoplebank announced the deal

on 15 January. Kuala Lumpur-based Navis

is the majority shareholder in Peoplebank

with founder and current chairman Leon

Lau holding a substantial stake.

Navis expects to achieve a return of

capital on the exit rather than book a profit.

Lower business investment in IT

following the GFC resulted in the business

failing to grow at the rate the private equity

firm had anticipated.

Peoplebank is Australia’s largest

specialist IT recruiting firm and expanded

into other Asia-Pacific region markets

under Navis.

But chief executive Peter Acheson

argues the business is positioned for

growth. “Peoplebank is a very strong

business. In the past few years we have

increased market share and have grown

the business into Asia,” he said.

Navis acquired a significant stake in then

ASX-listed Peoplebank through a shares

placement in February 2008 (APE&VCJ,

Feb 08). In the deal, Navis invested about

$50 million for a stake of around 48 per cent.

The capital injection was used for

Peoplebank to acquire competitor Ambit

Group creating Australia’s largest IT

recruitment business.

Navis then increased its stake and

privatised the business in 2009.

PERFORMANCEEMERgINg MARKETS INVESTORS TO RECEIVE STRONg RETURNS FROM TELECOMS dEAL

Telstra (ASX: TLS) is to pay $US697 million

to acquire Asian telecommunications

provider Pacnet Limited from Ashmore

Investment Management, Spinnaker Capital

and Clearwater Capital Partners.

The deal, announced on 23 December,

will effectively double Telstra’s global

enterprise services business in Asia.

The acquisition includes Pacnet’s interest

in a joint venture in China, PBS, which is

licensed to operate an internet protocol

virtual private network and data centres

across 23 provinces.

Telstra says the acquisition of Pacnet

will give it ownership of an extensive range

of services including software defined

networking, an expanded data centre

network and an extensive network of

submarine cables. The deal will also give

Telstra access to important new customers

across the Asian region.

Telstra plans to fully integrate all of the

Pacnet operations, except the China joint

venture, to maximise operating and capital

synergies.

The deal is subject to regulatory and

Pacnet financier approvals and mid-year

completion is expected.

Pacnet has headquarters in Singapore

and Hong Kong and offices throughout

the region including in Sydney. The

business was formed in 2008 by the

merger of the operations of Asia Netcom

and Pacific Internet.

Pacnet’s core assets are an integrated

network of data centres and submarine

cables across the Asia-Pacific region

which provide services to communications

carriers and enterprise customers in 61

cities. The business also has operations in a

further eight cities in the US and Europe.

Pacnet operates Asia’s largest privately-

owned submarine cable network - with

more than 46,000 kilometres of cables

- which has landing points in China, Hong

Kong, Japan, the Philippines, Singapore,

South Korea and Taiwan. In addition, the

company controls two of the five fibre pairs

on the Unity trans-Pacific submarine cable

network connecting Japan and the United

States.

Pacnet reported earnings before

interest, tax, depreciation and amortisation

(EBITDA) of $US111 million on revenues of

$US472 million for the 2013 financial year.

Ashmore Investment Management

and Spinnaker Capital are UK-based

emerging markets investment managers.

Clearwater Capital Partners is a New York

and Hong Kong-based special situation

investor which focuses on the Asian region.

Ashmore was created by a management

buyout of ANZ Banking Group’s emerging

markets fund management business

in 1999. Parent company, Ashmore plc

(LSE: ASHM), listed on the London Stock

Exchange in 2006.

INVESTMENT ACTIVITySOVEREIgN WEALTh FUNd CO-INVESTS IN RETIREMENT VILLAgES

The $NZ27 billion New Zealand

Superannuation Fund has linked with listed

investment fund Infratil Limited (ASX: IFZ,

NZX: IFT) to acquire retirement villages

operator RetireAustralia from JP Morgan


Global Special Opportunities Group and

Morgan Stanley Real Estate Investing.

The total value of the deal is $640.2

million with the partners providing cash

equity of about $214.8 million each (total

$429.5 million) and the rest being funded

by existing bank debt on RetireInvest’s

balance sheet. The total includes estimated

transaction costs of $23.5 million and is

subject to usual completion adjustments

for working capital and net debt.

After these adjustments, the acquisition

price represents the estimated

net tangible assets (NTA) value of

RetireAustralia.

The deal was announced on 24

December and settled on 31 December.

RetireAustralia is to be managed for the

investors by infrastructure manager HRL

Morrison & Co.

New Zealand Super chief investment

officer Matt Whineray said the sovereign

wealth fund was pleased to be increasing

its exposure to the retirement village

sector in Australia.

“The sector’s attractive demographics

and future growth opportunities make it a

good fit for long term investors such as the

NZ Super Fund,” he said.

Infratil chief executive Marko Bogoievski

said RetireAustralia offered very attractive

long-term growth prospects. With 28

villages across NSW, South Australia and

Queensland, the business had potential to

become the sector leader.

“RetireAustralia is led by an

experienced management team and

comes with a strong development

pipeline and a mature existing portfolio.

Underlying EBIT (earnings before interest

and tax) for the June 2015 financial year

is forecast at $35-40 million,” he said.

RetireAustralia chief executive Tim

Russell said his preference had always

been to find investors like New Zealand

Super and Infratil that had the necessary

experience and access to capital to

enable the business to maintain a long-

term focus as it entered the next phase of

its growth.

Minter Ellison acted a legal advisor

for the investors and Greenwoods and

Freehills for the vendors.

Infratil already has an investment in

Metlifecare, one of New Zealand’s leading

providers of retirement and aged care

facilities.


PERFORMANCEdISPUTE PUTS LOCAL OPERATIONS OF PRIVATE EqUITy INVESTEE IN AdMINISTRATION

Six companies which make up the

Australian business of Jones the

Grocer have been put into voluntary

administration as a result of dispute

between its private equity investor and

other key shareholder.

Overseas branches, which are believe to

generate up to 75 per cent of Jones the

Grocer’s revenues, are unaffected.

The Australian companies were put

under control of the business recovery and

insolvency division of accountancy firm

PKF Lawler on 12 December.

Jason Stone, Glenn Franklin and

Petr Vrsecky of PKF Lawler are now

administrators of the Australian business

which is continuing to trade.

Jones the Grocer was established as

an upmarket grocery store in Woollahra

in Sydney’s eastern suburbs in 1996.

Melbourne businessman John Manos

bought the business in 2005 and took its

concept to Singapore and the Middle East.

The head office is now in Melbourne.

Singapore-based L Capital Asia took a

50 per cent stake in Jones the Grocer in

July 2012 (APE&VCJ, Sept 12). L Capital

Asia is one of several private equity funds

sponsored by Paris-based luxury brands

group LMVH.

At the time of L Capital Asia’s

investment, Jones the Grocer had recently

acquired Becasse Bakery and Charlie and

Co hamburger store in Sydney plus the

Jones the Grocer franchise in Singapore.

The business already had operations in the

Middle East and planned further expansion

in South-East Asia.

After the Australian business was placed

in administration in early December,

lawyers Arnold Bloch Leibler issued a

statement on behalf of Manos saying L

Capital Asia’s investment in Jones the

Grocer had been intended to provide a

platform for further growth but a difference

in vision at board level had affected the

strategic approach of the group.

“I am now focused on finding a solution

to these differences with L Capital Asia

so we can maximise the value for all

our stakeholders including long-term

customers, suppliers and staff,” Manos said

in the statement.

A statement on behalf of L Capital

Asia, issued by public relations firm Cato

Counsel, said Manos had resigned as

sole director of the Australian operations

on December 10. On appointment, new

director Mark Watson had determined the

need to appoint a voluntary administrator.

“L Capital Asia continues to see strong

potential in the Jones the Grocer business

and will be supportive of plans that

allow for the continued operations of the

business,” the statement said.

Jason Stone of PFK Lawler said the

Australian business owed about $4.5

million plus employee entitlements. The

stores were continuing to trade and a

creditors meeting was to be held.

On investing in Jones the Grocer, L

Capital Asia managing partner Ravi

Thakran said he believed the business had

a concept with great potential to expand

across Asia. He anticipated five-fold

growth over five years could be achieved.

L Capital Asia continues to show strong

interest in Australian-founded luxury

goods businesses with potential for Asian

expansion.

The firm’s most recent Australian

investment was in swimwear company

Seafolly (APE&VCJ, Dec 14). L Capital Asia

also recently moved to full ownership of

“bush outfitter” RM Williams (see separate

item this issue) and has a stake in sports

apparel business 2XU.

PERFORMANCEPRIVATE EqUITy STAKE REdUCEd IN PARTIAL ASx FLOAT

Smaller companies private equity firm

Anacacia Capital has reduced its stake in

translation technology company Appen

in an IPO for about 32 per cent of the

company (30 million shares).

The share offer was completed in late

December and Appen listed on the ASX

on 7 January with Anacacia remaining the

largest shareholder.

A total of 94.6 million shares in

Appen (ASX: APX) were on issue at the

completion of the offer.

The Anacacia Partnership 1 LP fund

initially held just under 36 per cent of

Appen (33.8 million shares) but has since

transferred 4 million of those shares to its

new listed companies Wattle Fund (see

separate item this issue).

Appen co-founder and now chairman

Chris Vonwiller holds 17.2 million shares,

former managing director and now non-

executive director Bill Pulver, 8.8 million,

managing director Lisa Braden-Harder 1.8

million. None of those shareholders reduced

their holdings in the offer. Other members

of the management team held 2.3 million

shares at the completion of the offer.

All of these holdings are subject to

voluntary escrow arrangements restricting

disposal until after the release of Appen’s

financial results for the year to the end of

December 2015 but allowing for up to 25

per cent to be disposed of earlier if the

shares trade at 20 per cent above the offer

price for an extended period.

The 50 cents a share IPO raised $15

million giving the company an enterprise

value of $44.9 million. This was 6.6 times

2015 financial year forecast earnings before

interest, tax, depreciation and amortisation.

Appen recorded earnings before

interest, tax, depreciation and amortisation

(EBITDA) of $6.5 million on revenues of

$60.5 million in the 2013 financial year

but is forecasting EBITDA of $5.3 million

on revenues of $49.1 million for the 2014

financial year with a recovery the following

year. The company is expected to release

a performance update at the end of this

month (February).

Appen shares opened after listing at the

offer price of 50 cents and closed the first

day up 5 per cent at 52.5 cents. The shares

topped 62 cents briefly early in January

and closed at 56 cents on 30 January.

With the bulk of the company’s earnings

coming from the US, Appen appears an

attractive investment with the Australia

dollar predicted to fall further against the

US dollar.

Established in Sydney in 1996, Appen

now employs about 150 people mainly in

Australia and the US.

Anacacia made an expansion capital

investment in Appen in 2009 (APE&VCJ,

Nov 09) after the company had won NSW

and Australian Exporter of the Year awards

in the ICT category in 2008.

Appen acquired US company Butler Hill

in 2011 and Wikman Remer in 2012. The

company is now about five times the size

when Anacacia initially invested.


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Appen’s earnings have always come

mainly from exports and the proportion of

US sales was significantly increased by the

acquisition of Butler Hill.

NEW FUNdS & FUNdRAISINggLObAL IT bUSINESS bACKS LOCAL EARLy STAgE VENTURE FIRM

Global IT hardware business Cisco Systems

has made an investment in venture capital

firm Blackbird Ventures. While the amount

has not been disclosed, it is believed to be

in the millions of dollars.

Cisco is Blackbird’s first corporate

investor, with the rest of the fund investors

made up of individuals, mostly tech

founders and investors.

The investment is expected to enable the

early stage specialist to increase stakes in

its current investees and make a few more

new investments.

Announcing the investment on

11 December, Cisco Australia’s chief

technology officer Kevin Bloch said

Blackbird had been formed with the

backing of founders of some of Australia’s

most successful start-ups. These included

the founders of Atlassian, Campaign

Monitor and Aconex - and some of Silicon

Valley’s top investors such as Bill Tai and

Dave McClure.

Blackbird partner Bill Bartee outlined

how the Cisco investment came about:

“When we explained to the team at Cisco

what we believe in at Blackbird, they saw

that our activities and some of our portfolio

companies aligned with their strategy. They

see that the SaaS (software as a service)

companies we invest in all run in the cloud,

that our investments in Internet of Things

companies fit their Internet of Everything

focus, and that the rich set of relationships

we have can help them build their brand in

the Australian start-up ecosystem.”

Bloch said Australians and New

Zealanders had a wealth of ICT skills and

had proven themselves adept at identifying

market opportunities.

“We have recently seen significant

momentum among local start-ups

and early stage companies and our

announcement is the first part of a multi-

phase plan to foster this growth and invest

in this region,” he said.

Cisco’s investment would also give

Blackbird’s portfolio companies access

to cutting edge Cisco technologies very

early in their life-cycles. The international

company’s involvement with a local venture

capital firm would also improve Cisco’s

visibility to the Australia and New Zealand

start-up community far more effectively

than the company could do on its own,

Bloch added.

Niki Scevak, partner at Blackbird

Ventures, said: “Blackbird was set up to

create a community of founders helping

other founders. It’s a fantastic development

to have a corporation like Cisco that has

such an entrepreneurial heritage and

culture, joining the community.”

Formed in 2013 by Scevak, Rick Baker

and Bill Bartee - with Silicon Valley-based


John Scull on its investment committee -

Blackbird raised just under $30 million for

its initial fund in early 2013 (APE&VCJ, Apr

13). Since then about half of the fund has

been invested in 14 core investments plus

another 25 smaller investments through

the associated Startmate accelerator

program.

One investment has already been exited.

Fitness coaching smartphone app Sessions

was acquired by US health and fitness

platform My FitnessPal early last year.

Rick Baker says it is still early days

for the portfolio but a number of the

companies have come out of the gates

strongly, for example Shoes of Prey

recently raised a round from Khosla

Ventures (see separate item this issue),

Safety Culture has attracted Scott

Farquhar (co-founder of Atlassian) as an

investor, Ninja Blocks has raised a next

round from Optus Innovate and Citrix while

Canva has raised a follow-on round from

US venture firms Matrix, Shasta Ventures

and others.

Blackbird Ventures will be raising a

second fund this year.

INVESTMENT ACTIVITyCORPORATE VENTURER MAKES CLOUd-bASEd TEChNOLOgy INVESTMENTS

Telstra’s (ASX: TLS) corporate venturing

arm Telstra Ventures has made two new

investments in cloud-based software

technologies.

An unspecified minority investment in

cloud-based business process guidance

software company Panviva will be used to

accelerate product development and boost

international sales and marketing.

Announcing the investment on 10

December, Panviva chief executive Ted

Gannan said Telstra’s backing would be

pivotal for product advancement and

penetration of new markets.

Current users of Melbourne-based

Panviva’s SupportPoint technology include

BT, Bupa, Westpac, ANZ and Telstra.

Telstra global enterprise and

services executive director Michelle

Bendschneider said a reseller agreement

would allow the telecommunications

major to provide Panviva solutions to

its customers.

Telstra led a $15.5 million Series D

investment in Elemental, a US-based

leading supplier of software-defined.

UK digital television company Sky also

invested in the round along with existing

investors according to an announcement

by Elemental on 23 December.

Telstra Ventures managing partner Mark

Sherman said demand was increasing for

content to be provided across multiple

devices and Elemental was moving this

process from hardware to software and

into the cloud.

He said the investment would be

followed up by a commercial agreement

which would enable Telstra to integrate

Elemental’s technology into services such

as IPTV, Foxtel on T-Box, AFL, NRL and

BigPond movies.

NEW FUNdS & FUNdRAISINgNEW FEMALE-FOCUSEd ANgEL FUNd WILL SEEK TO RAISE $20M

Female-focused angel investor network

Scale Investors is planning to raise a

closed-end investment fund of at least

$20 million.

Scale was established in Melbourne in

March 2013 and now has more than 60

angel investor members.

The Scale Women’s Fund will have a

mandate to invest in a balanced portfolio

of 15-20 early stage - under $2 million

valuation - female-led high growth

companies. Preferred investments will be

ventures based on disruptive innovation

which have defensible channels to market.

Initial investments will typically be non-

controlling minority stakes of around

$500,000, and the fund will have capacity

to make follow on investments.

Chief executive Laura McKenzie said

Scale had developed strong deal flow and

set up rigorous assessment processes.

Investment enquiries from more than 300

female-led businesses had been reviewed

to date and a total of nearly $2.5 million

had been invested in five companies.

Scale sets a high bar for its investments.

At least five network members must

be prepared to invest, and one must be

prepared to lead the investment, before

any deal goes ahead.

It is planned that the Scale Women’s

Fund will co-invest alongside these angel

investments as a tax advantaged Early

Stage Venture Capital Limited Partner

(ESVCLP) registered vehicle. The fund is

scheduled to have non-obligatory first

rights to invest up to 50 per cent of the

amount companies seek to raise through

the Scale network.

As the manager of The Scale Women’s

Fund, Scale will not charge management

fees as a percentage of committed funds

but will instead maintain an operating

budget transparently accounting for all

expenses incurred.

McKenzie stresses that the focus

on female-led companies is based on solid

evidence of strong investment returns

and an underserviced investment sector

rather than a social agenda to address

gender bias.

This opportunity is being recognised

around the world and a number of new

funds focused on women entrepreneurs

were launched in the US and Asia during

2014, she said.

McKenzie points to the US-published

Diana Report, Women Entrepreneurs

2014 as further evidence. Lead author Dr

Candida Brush states in the report: “There

is an enormous untapped investment

opportunity for venture capitalists

smart enough to look at the numbers

and fund women entrepreneurs. Only a

small portion of early-stage investment

is going to women entrepreneurs yet

our data suggests that venture capital

funded businesses with women on the

executive team perform better on multiple

dimensions.”

The Scale fund will target an average

return of 2.5 times investment for each

portfolio company and an overall return

of up to 20 per cent annualised over ten

years – in line with current US and UK

returns benchmarks for angel groups’

investing.

Exits are more likely to be via trade

sales rather than through private equity

or venture capital acquisitions or IPOs,

McKenzie said, but this will substantially

widen the range of opportunities to

achieve targeted returns.

Scale was set up by business women

Susan Oliver, Annette Kimmitt and Carol

Schwartz inspired by the US Golden

Seeds network. They also recognised that

with only about 2 per cent participation,

women were less involved in angel


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investing in Australia than in the US

or the UK.

Oliver is an experienced company

director and chair, Kimmitt is global leader

for middle market at Ernst & Young, and

Schwartz is an experienced company

director and business entrepreneur. All

three were active angel investors before

setting up Scale.

The Victorian Government, through

the Department of State Development,

Business and Innovation, has committed

to back the venture with funding of up to

$600,000 over three years. Scale is also

supported by PricewaterhouseCoopers,

Norton Gledhill and Morrows. Angel

investors pay $2,000 a year to be

members of the network.

Scale angels have invested in mobile

phone technology through Paloma Mobile

(APE&VCJ, Feb 14); image recognition

trademark search technology, Trademark

Vision; social media development

marketplace, CloudPeeps; and two other

companies, details of which are to be

announced shortly.

NEW FUNdS & FUNdRAISINgPRIVATE EqUITy FIRM SETS UP FUNd TO INVEST IN LISTEd SMALL CAPS

Smaller companies-focused private equity

firm Anacacia has established a fund to

invest in listed small cap stocks.

Anacacia managing director Jeremy

Samuel said the new open-ended Wattle

Fund had been planned to be very small

with an initial minimum size set at $10

million but the fund quickly attracted $30

million in commitments after launching

in early December without any formal

fundraising promotion.

The minimum $5,000 commitments

came from Anacacia’s existing investor

base, a mix of superannuation funds,

corporate chief executives, high net worth

individuals and family offices.

Anacacia has recruited Tom Granger

as portfolio manager of the Wattle Fund.

Granger was formerly an associate

portfolio manager at listed equities

investment manager NAOS.


Other members of the Anacacia

investment team will assist with identifying

investments and managing the portfolio.

The fund will invest up to $5 million in

“minority but influential” stakes in companies

with market caps of $20-$200 million.

Anacacia has seeded the fund with

four million shares in its investee Appen

(ASX: APX) which partially listed on the

ASX in January (see separate item this

issue). These shares are part of Anacacia’s

total retained stake of 33.8 million Appen

shares.

Samuel said this investment illustrated

the opportunity for the fund to follow on

investing after listing in companies which

had been successful as private equity

investments and, unlike a closed-end

private equity fund, there would be no

time limits on investments.

He said there was limited analysis

or other information available for the

small and medium-size Australian listed

companies that the Wattle Fund would be

targeting but this meant that identifying

those which would perform best should

generate very high returns.

The fund will also restrict its investing to

profitable companies with revenues of up

to $400 million and annual earnings before

interest, tax and amortisation (EBITDA) of

$5 million to $25 million.

Speculative sectors such as pre revenue

biotechnology and small resources

companies will not be considered.

Anacacia’s initial research found there

were 555 ASX-listed companies in its

target range (which excluded a larger

number of smaller companies).

Stocks in this bracket had outperformed

the S&P/ASX300 over the past three years.

While broad market movements accounted

for 40 per cent of this performance, the

rest was the result of good management

and exploiting new markets.

Anacacia planned to identify the top

2 per cent of these stocks as potential

investment targets.

Samuel said he was excited to have

the opportunity to extend Anacacia’s

internationally recognised success

in private equity (in 2011, alternative

assets research company Preqin ranked

Anacacia’s first fund, Anacacia Partnership

I, the leading performer globally among

2006-2008 vintage buyout funds)

into the listed sector. The Wattle Fund

would utilise themes that had helped

Anacacia’s success to date such as

identifying founders who might soon

be seeking to exit holdings ahead of

retirement and providing growth capital

for companies planning acquisitions. It is

anticipated that the current capital of the

Wattle Fund will be fully invested by the

end of the year.

Meanwhile, Samuel said successful exits

from Anacacia’s first fund had kept it on

target to be wound up as one of the global

top performers of its vintage.

Anacacia Fund II closed its fundraising at

an above target $150 million in mid-2013.

Samuel said the fund was so far about

one-third invested. Investments so far

were healthcare equipment company K

Care, Yumi’s Quality Foods and Careers

Training Group, all of which were already

returning dividends.

INVESTMENT ACTIVITyUS VENTURE FIRM INVESTS IN ONLINE ShOE dESIgN bUSINESS

Blackbird Ventures investee Shoes

of Prey has raised $US5.5 million in a

Series A investment round led by Silicon

Valley-based venture capital firm Khosla

Ventures.

Other new investors in the round

include former Sequoia Capital partner

David Spector and his co-founder in US

online lingerie store ThirdLove Heidi Zak

plus Andy Dunn, chief executive and

co-founder of US online menswear store

Bonobos.

Blackbird Ventures also participated

in the round along with other existing

investors including Atlassian co-founder

Mike Cannon-Brookes and US early stage

investor Bill Tai.

Shoes of Prey has previously raised

a total of $4.75 million in Australian

fundraising rounds in 2012 and 2013.

The latest fundraising sees Shoes of Prey

co-founders Jodi Fox, Michael Fox and

Mike Knapp reducing their combined stake

in the business to just under 50 per cent.

Launched in 2009, Shoes of Prey

operates an online platform that enables

customers to design their own shoes

which it then has made and dispatched

to the buyer. The company more recently

began rolling out design studios in

department stores such as David Jones in

Australia and Nordstrom in the US.

Shoes of Prey sees the design studios

as promotional vehicles for its online

services as well as an additional branch of

the business.

INVESTMENT ACTIVITyLOWER MId-MARKET FIRM TO INVEST IN SydNEy bUS OPERATOR

Next Capital is to acquire a majority stake in

Sydney northern beaches area bus operator

Forest Coach Lines.

Financial details of the deal -

foreshadowed in December APE&VCJ

- have not been released but it is believed

to value the business at a little under $50

million. Completion of the transaction is

subject to government approvals.

The deal, agreed on 8 December, backs

a management buyout with the vendors

the Royale family which has owned Forest

Coach Lines for 85 years.

Current joint managing director David

Royale will be chief executive under

the new ownership and will maintain a

significant minority shareholding.

Royale said he welcomed Next Capital’s

investment, the lower mid-market private

equity firm’s first in the Australian public

transport sector.

Next Capital, however, has experience

in the sector in New Zealand. The firm

invested in New Zealand bus operator Go

Bus in mid-2012 and exited the business

with a sale to Maori investment trusts in

August 2014 (APE&VCJ, Sep 14).

Royale said he expected Forest Coach

Lines’ reputation for high quality customer

service delivery, high patronage growth and

efficient operations - combined with the

Next Capital’s significant experience in the

New Zealand bus sector - to position the

company for significant future growth.

Greenstone Partners acted as financial

advisers to Next Capital and management

investors.

PERFORMANCECONFECTIONARy TURNAROUNdS ENd IN AdMINISTRATION

Two Melbourne confectionary businesses

were placed in voluntary administration


in January bringing to an end turnaround

attempts by the local arm of UK

restructuring firm Hilco Capital.

Australia’s oldest chocolate maker Ernest

Hillier went into administration first, just

under a year after acquisition. Capricorn

Licorice producer Betta Foods, which

Hilco acquired less than four months ago,

followed about a week later.

Both companies have been put under

the administration of Bruno Secatore

of Melbourne insolvency practitioners

CorCordis. The businesses are continuing

to trade and are to be offered for sale as

going concerns.

After acquiring Betta Foods, Hilco,

which trades as Re:Capital in Australia, had

planned to cut costs by running the two

businesses together.

North Coburg-based Ernest Hillier -

which also produces confectionery under

the Newman’s brand - employs about 60

people, has retail and wholesale operations

and turns over about $11.1 million a year.

The company’s customers include major

supermarket chains but its operations are

not large enough to achieve the benefits

of scale of large chocolate makers such as

Cadbury’s.

Re:Capital acquired the equity of Ernest

Hillier Pty Ltd in February 2014 from

members of the Piedimonte family - of

Melbourne’s Piedimonte’s supermarkets

- who wished to focus on other business

interests.

Hilco refinanced a portion of the secured

debt of the business as part of a balance

sheet restructuring.

Executives from Melbourne corporate

advisory firm Henslow Partners took

senior management roles and were initially

supported in a turnaround process by

operational specialists from Hilco’s UK team.

Re:Capital acquired the equity of Betta

Foods Australia in October 2014. The

Broadmeadows-based confectionary

manufacturer employs about 180 people

and turns over about $40 million a year.

INVESTMENT ACTIVITygLObAL PRIVATE EqUITy FIRM bUILdS ON AUSTRALIAN ACqUISITION

TPG Capital, PAG Asia Capital and their

co-investor Ontario Teachers’ Pension

Plan, have made a follow-on investment in

the US after completing the acquisition of

commercial real estate services business

DTZ in November.

The new acquisition is Chicago-based

property services firm Cassidy Turley.

TPG managing partner Ben Gray

sad the consortium was excited about

bringing the two businesses together.


January, DTZ said it created a global

top-three commercial real estate services

company as DTZ was already well

established in Europe and Asia.

No financial details of the transaction

have been released but DTZ said the

merged business would have annual

revenues of around $US2.9 billion.

Cassidy Turley chief executive Joseph

Stettinius Jr. is now DTZ chief executive

of the Americas under global chief

executive Tod Lickerman.

Brett White, a former chief executive

of the world’s largest real estate service

firm CBRE Group, is to become full time

executive chairman of DTZ next month

(March). He is also an investor in the

private equity consortium.

UGL (ASX: UGL) announced in June

(APE&VCJ, Jul 14) that it was to sell

its DTZ property services division to

the private equity consortium for an

enterprise value of $1.215 billion. UGL said

at the time that the division had annual

revenue of more than $2 billion.

INVESTMENT ACTIVITySOVEREIgN WEALTh FUNd INVESTS IN WASTE gASES CONVERSION TEChNOLOgy

The New Zealand Superannuation

Fund has made a $US60 million direct

investment in gas fermentation company

LanzaTech.

Chicago-based LanzaTech turns waste

gases from steel mills into ethanol and

other high value fuels and chemicals.

LanzaTech, which was founded in New

Zealand in 2005, is a pioneer of gas

fermentation and is targeting to put its first

commercial plant into production next year.

The New Zealand Super Fund’s head

of international direct investment Nigel

Gormly said: “LanzaTech is one of the

most exciting companies New Zealand has

produced, with significant global potential.

We’re proud to continue the New Zealand

connection and to be able to assist in

LanzaTech’s ongoing growth.”

LanzaTech chief executive Jennifer

Holmgren said the company was

“tremendously excited” to include the NZ

Super Fund as one of its investors.

“Our roots and hearts are in New Zealand

and this investment will allow us to expand

and develop our global platform, increasing

our ability to play a part in New Zealand’s

energy future,” she said.

The LanzaTech investment is one of a

series of expansion capital investments in

early stage growth companies made by

the $NZ27 billion New Zealand Super Fund

in recent years.

Gormly said expansion capital

represented only around 1 per cent of the

NZ Super Fund’s investments but was an

appropriate part of the mix.

“The fund is well diversified and

expansion capital’s risk/return profile is a

good match for growth oriented investors

with a long time horizon,” he said.

Other NZ Super Fund expansion

capital investments include stakes in

US companies Bloom Energy and Ogin

Inc. Bloom Energy has developed new

generation solid oxide fuel cell power

generators, and Ogin manufactures small-

scale high-efficiency wind turbines for

power generation.

Gormly said the fund had been attracted

to LanzaTech because the company

provided exposure to the waste-to-energy

sector.

“We are actively diversifying into

alternative and non-conventional energy

alongside traditional energy investments,”

he added.

Silicon Valley-based Khosla Ventures

remains the largest shareholder in

LanzaTech.

Sir Stephen Tindall’s K1W1 venture

capital fund was one of LanzaTech’s

first investors. Sir Stephen said the NZ

Super Fund investment was a key step in

continuing the company’s progress and

global expansion.

“LanzaTech has an important social

contribution to make in reducing air

pollution and at the same time turning

waste gas into valuable products,” he said.

LanzaTech has now attracted more

than $US160 million in investment capital.


Other investors include Qiming Venture

Partners, Malaysian Life Sciences Capital

Fund, Petronas, Mitsui, Siemens and China

International Capital Corp.

INVESTMENT ACTIVITyOVERSEAS FIRM MOVES TO FULL OWNERShIP OF RETAIL ChAIN

Singapore-based L Capital Asia has paid

$50 million to move to full ownership of

“bush outfitter” retail chain RM Williams.

L Capital Asia acquired the 50.1 per cent

stake of former News Australia Ltd chief

executive Ken Cowley and his family in

October.

L Capital Asia paid $50 million for a 49.1

per cent stake in 2013 (APE&VCJ, May 13)

with an option to acquire the remainder.

L Capital Asia is one of several private

equity managers sponsored by Paris-

based luxury brands group LMVH.

McGrath Nicol Services was financial

adviser and Johnson Winter & Slattery

legal adviser to L Capital Asia on the deal.

NEW FUNdS & CAPITAL RAISINgSCANAdIAN PENSION FUNd bACKS AUSTRALIAN MANAgER’S INFRASTRUCTURE STRATEgy

One of Canada’s largest pension funds

has committed $US200 million to AMP

Capital’s new global infrastructure strategy.

The commitment has been made by

Ontario Pension Board (OPB) which

manages the province’s defined benefit

Public Service Pension Plan.

The commitment also involves co-

investment rights.

AMP Capital is planning to raise

$US2 billion for the closed-end global

infrastructure strategy launched last year

(APE&VCJ, Nov 14). The strategy has

been seeded with $US750 million worth

of assets from AMP Capital’s open-ended

Strategic Infrastructure of Europe Fund.

OPB Private Markets managing director

Glenn Hubert said: “We were impressed by

AMP Capital’s long and successful history

in infrastructure investment as well as

the ability to gain exposure to multiple,

high quality assets through the global

infrastructure business. We’re pleased to

partner with AMP Capital through this

commitment, particularly as it grows its

presence in North America.”

AMP Capital’s infrastructure equity

investment team is based in New York.

The firm’s head of Americas,

infrastructure equity, Dylan Foo, said:

“There are an increasing number of

investment opportunities in North

America making it an important region

for AMP Capital as we grow our business.

We continue to focus on mid-market

opportunities where we see relative value

versus larger transactions.”

Global asset manager Pantheon was

a cornerstone investor in the new

strategy committing an undisclosed

“significant” sum.

AMP Capital global head of

infrastructure equity Boe Pahari said OBP’s

commitment was further endorsement of

the strength of the strategy.


“Growing numbers of institutional

investors are seeking greater exposure to

alternative assets such as infrastructure

attracted to its predictable risk-adjusted

returns, consistent yields and portfolio

diversification,” he said.

INVESTMENT ACTIVITyUS FIRM LEAdS $US10M INVESTMENT IN CANCER dRUg dELIVERy SySTEM

Boston investment firm GRT Capital

Partners has led a $US10 million

Series B financing round for Sydney-

based emerging cancer treatment

biopharmaceutical company EnGeneIC.

The round was over-subscribed.

Other new US investors in the round

include venture capital fund Foley

Ventures, which is sponsored by US

national legal group Foley & Lardner, and a

number of Foley & Lardner partners.

The round was also supported by

existing investors.

As a result of the financing, EnGeneIC

has established a US office in New York

City and appointed Anjan Chatterji as

executive vice president of corporate

development. Chatterji will operate from

the New York office.

Chatterji, a lawyer, has joined from

Foley & Lardner where he was the firm’s

director of healthcare economics. He

has also been an angel investor in the

healthcare space.

EnGeneIC joint chief executive, Dr

Jennifer MacDiarmid, said Anjan Chatterji

had been instrumental in securing the

current financing round and the company

anticipated he would be a valuable

addition to its team.

EnGeneIC will primarily use the

new financing to advance the clinical

development of its antibody-targeted EDV

nanocell technology platform.

The company expects to commence

a Phase 1/2a clinical trial in recurrent

glioblastoma (a type of brain tumour)

in mid-2015. The trial is being planned in

conjunction with a leading US hospital.

A personalised medicine trial is also to

be carried out at the Royal North Shore

Hospital in Sydney.

Additionally, the funding will be used

to continue the company’s Phase 1/2a

mesothelioma trial which is currently

enrolling patients in Australia and is

expected to announce preliminary

safety data in the second quarter of

2015. Announced in November, the trial

is supported by the Asbestos Disease

Research Institute.

GRT Capital Partners co-founder and

portfolio manager Timothy Krochuk said:

“We believe EnGeneIC’s novel delivery

technology can play an important role

in changing the treatment paradigm

for highly cytotoxic chemotherapy and

functional nucleic acids as well as improve

outcomes by engaging the immune system

to target tumours.”

EnGeneIC joint chief executive

Dr Himanshu Brahmbhatt said the

investment round provided validation

from sophisticated US institutions and

this would be critical for the company to

achieve its clinical goals.

EnGeneIC says its bacterially derived

EDV nanocells are a powerful nanoparticle

drug delivery system designed to directly

target and effectively kill tumour cells

with minimal toxicity while at the same

time stimulating the immune system’s

natural anti-tumour response. Injected

intravenously, the EDV nanocells exit the

vascular system only within tumours and

attach to cancer cells via a specially target

designed antibody. Once attached, a

nanocell is able to enter a tumour cell and

deliver a drug payload of up to one million

drug molecules. In parallel, the bacterial

cell wall of the nanocells stimulate key

components of the immune system which

are then activated to seek out and destroy

cancer cells.

The technology can be used to carry and

release high concentrations of molecularly

targeted anti-cancer drugs and offers a

potential new means of treating drug-

resistant cancers.

EnGeneIC is currently preparing an

Investigational New Drug (IND) application

for submission to the US Food and Drug

Administration (FDA).

NEW FUNdS ANd FUNdRAISINgUS RETIREMENT FUNd ALLOCATES TO AUSTRALIAN MANAgER

Maine Public Employees Retirement

System (Maine PERS) has made a

new $US75 million infrastructure

investment commitment to IFM Investors,

according to Alt Assets and LP Real

Estate websites.

The US retirement fund was already an

investor with IFM, the only Australian firm

on its roster of investment managers.

IFM has two infrastructure funds, the

IFM Global Infrastructure Fund and the

IFM Australian Infrastructure Fund. LP

Real Estate reports Maine PERS has

allocated to the ex-Australia IFM Global

Infrastructure Fund.

IFM investors has a North American

infrastructure investment team based in

New York.

While it remains owned by about 30

Australian industry super funds, IFM

Investors – formerly Industry Funds

Management – has restructured itself as

a global asset manager over recent years

and has sought to build up its roster of

overseas investors.

INVESTMENT ACTIVITy$2M FOR COMMERCIALISATION OF ThERAPEUTICS dEVELOPMENT TEChNOLOgy

The Brandon Capital-managed Medical

Research Commercialisation Fund

(MRCF) has provided seed funding of

$2 million to set up early stage biotech

company Solvanix.

Solvanix has been established to

commercialise a technology that can

be used to reduce the tendency of

monoclonal antibody products to

aggregate.

The proprietary technology StAbilize

was developed by the Gavan Institute of

Medical Research in Sydney.

StAbilize works by optimising amino

acids at specific locations within the

structure of antibodies.

Solvanix is to work with biotech

and pharma organisations developing

therapeutic antibodies to encourage them

to utilise StAbilize. Non-exclusive licences

for the technology will be available.

Brandon Capital investment manager

Chris Smith, a non-executive director

of Solvanix, said the company was a

great example of the sort of pioneering

technologies that the MRCF had been set

up to commercialise.


He said StAbilize should be a game-

changer for the global antibody

therapeutics industry as it was the only

broadly applicable technology proven to

reduce antibody aggregation.

Founder and chief scientific officer

of Solvanix Associate Professor Daniel

Christ said the tendency of therapeutic

antibodies to aggregate under certain

conditions was a critical problem in

their expensive development and

manufacturing processes. StAbilize should

help eliminate this problem.

INFORMAL VENTURE CAPITALCORPORATE VENTURER bACKS ONLINE NEIghbOURhOOd SOCIAL NETWORK

Westpac Bank’s corporate venturing arm

Reinventure Group has invested in online

neighbourhood social network Nabo.

Nabo launched in early December after

raising $2.25 million from Reinventure,

Seven West Media and other investors.

The founder of Nabo is Adam Rigby

who co-founded daily deals site JumpOnIt

and was formerly chief executive of deals

site LivingSocial.

According to Rigby, Nabo (nabo.com.

au) is Australia’s first neighbourhood

social network, a free social media

platform that enables individuals and

organisations in a neighbourhood to

directly connect online.

Rigby says Nabo is not just another

online community but a way for

individuals and organisations to link

with their neighbours via the internet.

Connections are made through secure

hyperlocal websites.

Initial trial sites have been established

so far in a number of suburbs in Sydney,

Melbourne, Brisbane and Newcastle.

Nabo is based on US site Nextdoor

which was founded in 2010 and attracted

$US90 million in funding – effectively

valuing the company at around $US500

million – before it had developed a

revenue model. Nextdoor has attracted

police departments as partners and

is claimed to have reduced crime

by as much as 10 per cent in some

communities.

Nabo is targeting reaching a million

users before the end of 2015.

INFORMAL VENTURE CAPITALINVESTMENT AVAILAbLE FOR AdVANCEd MANUFACTURINg

Private investment firm Manifex has

opened applications for its second

round of funding for high technology

commercialisation projects.

Funding will be available to support

start-up companies that have developed

advanced materials or advanced

manufacturing technologies.

Manifex was established in early

2014 and has so far been working

with companies in these sectors

being incubated or assisted by the

Victorian Centre for Advanced Materials

Manufacturing (VCAMM). Scoresby,

Victoria, based VCAMM is a not for profit

organisation which has been operating

since 2003.

Manifex managing director Iain Ralph,

who previously worked for VCAMM, said

the first round of Manifex investments

were progressing successfully and the

company’s Asian and local investors now

wanted the company to identify further

investment opportunities.

“As an evergreen fund we have the

ability to raise capital as required to

support the needs of our growing

portfolio of firms,” Ralph said.

Manifex will provide funding for the

commercialisation of technologies and to

generally assist in the ongoing growth of

businesses in its sector.

Companies which have received

funding from Manifex so far include

Cytomatrix in Geelong and Circa Group

in Coburg.

Cytomatrix has developed a highly

scalable haematopoietic stem cell

expansion technology which has

potential for use in organ transplant

processes and as an adjunct to

chemotherapy.

With partners Austeng and Deakin

University, Cytomatrix has also

developed a machine for producing

short nanofibres. This project received

a 2014 Excellence Award in the Research

and Development/Innovation category

at this year’s Victorian Engineering

Excellence Awards.

Circa has developed what it claims to

be the world’s first continuous process

for the manufacture of an important

and highly flexible molecule from

waste cellulose. The molecule can be

used to produce a platform chemical

that has applications in numerous

international markets.

Founders Tony Duncan and Warwick

Raverty started the business in a home

garage four years ago and only recently

moved into their own manufacturing

facility where they have expanded their

workforce and are now processing

orders from large European chemical

companies.

Ralph said Cytomatrix and Circa had

been recipients of targeted support

by VCAMM over a number of years

as they developed their technologies.

VCAMM’s interests in both companies

had been acquired by Manifex which

had already provided initial

commercialisation investment and

expected to provide more.

INVESTMENT ACTIVITyPROdUCE bUSINESS bACK IN AUSTRALIAN OWNERShIP

Perfection Fresh Australia, the country’s

largest family-owned fresh produce

business, has acquired Moraitis Group,

a former Catalyst Investment Managers

investee.

The vendor was King Bid Company, an

Australian subsidiary of Hong Kong Stock

Exchange-listed Chevalier International

Holdings. The deal was completed on 19

January.

Chevalier acquired Moraitis from

Catalyst and the Moraitis family for $211.25

million in 2013 (APE&VCJ, Mar 13). Sydney-

based Perfection Fresh is operated by

Michael and John Simonetta and owned

by the Simonetta family and family office

The Victor Smorgon Group.

According to S&P CapitalIQ, the sale

agreement includes the licence for the

kumato tomato variety, a 4.7 hectare

glasshouse facility in Tatura, Victoria, and

access to a strategically aligned network

of tomato growers.

Meanwhile, Australia’s largest grower

and distributor of fruit and vegetables,

Costa Group, is reported to have

appointed Goldman Sachs and UBS as

joint lead managers for an IPO and float


on the ASX planned for the first half of

this year.

US private equity firm Paine & Partners

took a 50 per cent stake in Costa Group

in 2011 (APE&VCJ, Aug 11) with the Costa

family retaining the remainder.

In 2013, Costa Group acquired South

Australian business Adelaide Mushrooms.

Another significant fresh produce

business, Freshmax Group, is 60 per cent

owned by Auckland-based private equity

firm Maui Capital.

Maui Capital acquired its stake in the

trans-Tasman business from Wolseley

Private Equity in early 2012 (APE&VCJ,

Feb 12).

INFORMAL VENTURE CAPITAL NEW PEER-TO-PEER LENdINg VENTURE PLANS PRIVATE CAPITAL RAISINg

The team behind a new peer-to-peer

lending venture is planning a private

capital raising next month (March) and a

launch of online operations soon after.

Melbourne-based MoneyPlace has applied

for an Australian Securities and Investments

Commission (ASIC) Financial Services licence

which it will need to begin operations.

The team behind the venture includes four

former National Australia Bank executives:

Stuart Stoyan, former business banking head

of strategy; former head of unsecured credit

Paul Abbey; business banker Melanie

Nguyen; and strategic development

manager Matthew Santosa. The team is

completed by an experienced web developer

James Smith as chief technology officer.

So far the only outside investor in

MoneyPlace is a UK hedge fund which has

not been named.

SocietyOne launched in 2012 as

Australia’s first peer-to-peer lender. The

business quickly attracted customers

and in December, 2014, James Packer, Ryan

Stokes and Lachlan Murdoch invested

in the venture.

2014 AUSTRALIAN PRIVATE EQUITY INVESTOR SURVEY

2014 AUSTRALIAN INSTITUTIONAL INVESTOR SURVEY Of PRIVATE EQUITY & VENTURE cAPITAL INVESTINg – PRIVATE EQUITY mEDIAReport authors: David Brown, Simon Uzcilas, Adrian Herbert

Survey report plus observations: $200 (inc. GST).Special discount price for Australian Private Equity & Venture Capital Journal subscribers: $150 (inc. GST).

This survey, completed in late 2014, uncovers a substantial reduction in the proportion of investors intending to increase allocations to private equity. The survey also reveals that the trend for local investors – predominantly superannuation funds – to invest private equity allocations globally rather than locally is still strengthening. Accompanying observations explore reasons for these changes based on direct comment from decision makers.

To purchase online visit: www.privateequitymedia.com.au and click on “Subscribe” in the green toolbar.We will email your PDF copy as soon as your payment is processed.

For enquiries email: [email protected]

NOw AVAILABLE

2014

1

Australian Institutional Investor Survey of Private Equity & Venture Capital Investing

2014Private Equity Media

Authors: David Brown, Simon Uzcilas, Adrian Herbert


Todd Corporation is reportedly seeking

to sell its investment in Crown Castle

Australia, the holder of the country’s

largest portfolio of mobile phone services

relay infrastructure and sites.

Todd Corporation and other minority

shareholders hold around 20 per cent of

Crown Castle Australia which was formed

in 2000 to acquire the repeater station

infrastructure and now controls around

1,800 sites.

The majority of the business is owned by

US company Crown Castle (NSE: CCI).

INVESTMENT ACTIVITyMININg TEChNOLOgy ANd SERVICES SPECIALIST MAKES FIRST INVESTMENT

Mining equipment technology and services

private equity firm Jolimont Global Mining

Systems has made its first investment,

in Montreal, Canada, based Newtrax

Technologies Inc.

Newtrax is a leading provider of

electronic safety and automation products

for underground mines.

Jolimont Global Mining Systems was

formed in November 2013 as a joint

venture between Melbourne private equity

firm Jolimont Capital and international

mining-focused private equity firm

Resource Capital Funds (RCF). RCF has

its headquarters in Denver and also has

offices in New York, Toronto and Perth. The

firm is currently investing its $US2 billion

sixth fund.

Chief investment officer of Jolimont

Global, Charles Gillies, said Jolimont Global

had looked at over 200 potential mining

equipment technology and services space

investments globally before deciding on

Newtrax as its first investment.

“Jolimont recognises the potential of

Newtrax’s products to dramatically reduce

bottlenecks and safety blackspots in

underground mines,” he said. “Newtrax

impressed us with their clear market vision

and quality of products and highly capable

management team.”

Gillies has joined the board of the

company.

Newtrax is a leader in electronic safety

and automation products for underground

mines. The company’s flagship wireless

networking platform MineHop is designed

to extend network connectivity into

active mining areas prior to permanent

communications infrastructure being

installed. The wireless nodes can be

installed by mineworkers in seconds and

can provide chains of communication right

up to a workface.

The investment was made in July.

PERFORMANCEUS bRANdS bUSINESS ACqUIRES ICONIC SURFWEAR COMPANy

Surfwear and skatewear brand Mambo has

been acquired by a private equity-backed

US brands business.

Saban Brands has acquired Mambo for

an undisclosed amount.

The company is an affiliate of Los

Angeles-based entertainment and lifestyle

specialist private investment firm Saban

Capital Group.

Announcing the acquisition on 6

January, Saban Brands said Mambo

would join its newly formed Saban Brands

Lifestyle Group which includes the Paul

Frank and Macbeth labels.

The company’s managing director of

strategic business development, Dan

Castle, said: “As an Australian brand with

a unique art-driven aesthetic, Mambo will

play a significant role in our international

growth strategy both in Australia and

around the world.”

He said Saban Brands planned to

expand Mambo’s Sydney office.

Mambo managing director Angus

Kingsmill said: “This is a massive coup for

Mambo and one the Australian team is

incredibly excited about. Saban Brands

is a major player in the international

entertainment art, music and brand

marketing space. The partnering of

Mambo with Saban Brands will provide

a platform for talented Australian and

international artists to showcase amazing

wearable art to a global audience on a

scale much greater than ever before.”

Mambo was founded by entrepreneur

Dare Jennings about 30 years ago.

Private investment company Equity

and Capital Finance Australia, owned by

Kingsmill and accountant Tony Woodward,

bought Mambo from Gazal Corporation

for an undisclosed sum in 2008 (APE&VCJ,

Feb 08).

Two UK peer-to-peer lenders, RateSetter

and ThinCats also recently launched

operations in Australia.

New Zealand’s only similar business

Harmoney, which launched in 2013,

recently attracted a $7.7 million

investment, for a 15 per cent stake, from

online trading website Trade Me (ASX/

NZX: TME).


January, Trade Me chief executive Jon

Macdonald said the deal was a great fit as

the Trade Me platform was all about items

changing hands and Harmoney’s was all

about dollars changing hands.

Harmoney chief executive Neil Roberts

welcomed the investment and strategic

partnership which he said gave Harmoney

access to a distribution channel and deep

knowledge of building and running an

online marketplace.

The leading peer-to-peer lender in

the US, Lending Club (NYSE: LC) was

established eight years ago. Lending Club

raised nearly $US870 million when it listed

in December making it the biggest tech

stock listing of the year.

Venture capital firms which were early

investors in Lending Club include Norwest

Partners, Canaan Partners, Morgenthaler

Venture Partners and Bay Partners. Later

venture investors included Foundation

Capital, Union Square Ventures and Kleiner

Perkins Caulfield & Byers.

The venture investors are believed to be

retaining their holdings so far.

Peer-to-peer lending is targeting a

highly profitable slice of the business of

major banks, personal loans.

Entrepreneurs behind the ventures

claim they are able to use new online

technologies to more cost effectively rate

the credit-worthiness of loan applicants

than conventional banks. They also claim

to be able to offer much better investment

returns to customers who provide loan

capital because of much lower operating

costs than banks.

NEWSMObILE PhONE SERVICES INFRASTRUCTURE STAKE FOR SALE

Wellington-based family-owned

conglomerate and investment company

–

–

–


NEWSMEdICAL dEVICE COMMERCIALISATION gRAdUATES WIN SChOLARShIPS

Two participants in ATP Innovations’

recently completed Medical Device

Commercialisation Training Program -

now called “Ignition Medical” - have been

awarded scholarships to a University of

San Francisco biotech incubation program.

The winners of the QB3 Rosenman

Scholarships are Dr Sheridan Gho and Dr

Michael Weaver, both of the University of

Wollongong.

The two young researchers will take part

in a two-year program under which they

will work with clinicians in San Francisco

to further commercialise their project. The

QB3 program also provides laboratory

facilities and is regarded as the biotech

equivalent to UCSF’s well-established

digital technology commercialisation

program.

Gho and Weaver have been working

on a device to manage lymphoedema,

a condition which affects one in three

breast cancer survivors. Lymphoedema

causes localised fluid retention and painful

tissue swelling. Gho and Weaver have

developed a sleeve that reduces pain from

the condition by massaging the lymphatic

system.

The scholarships were announced by

NSW Minister for Health Jillian Skinner

when she presented certificates to

graduates of the three-month Medical

Device Commercialisation Training

Program at ATP Innovations in Sydney on

9 December.

The minister said the NSW government

and the NSW Office for Health and

Medical Research were proud to fund

the scholarships and were confident the

knowledge the researchers would gain

would be shared on their return.

ATP’s Director of Commercial

Development, Ben Wright, who directed

the Medical Device Commercialisation

Training Program, said the state

government had been visionary in

establishing a Medical Device Fund and


Training Program as NSW had a record

of research excellence in the medical

devices sector.

The medical researchers who

participated in the program have all been

developing their technologies in NSW

universities and continue to be supported

by their host institutions.

The minister noted that when she had

become Health Minister - and the state’s

first Minister for Medical Research - she

had halved a small ministerial contingency

fund to increase the resources of the NSW

Medical Devices Fund. This had enabled

financing of follow-on projects such as


Training Program. She said she hoped

the program would help bridge the gap

between medical research and delivery

of improved medical treatments through

commercialisation of research.

The Australian medical technology

market was currently worth about $10

billion a year, she said, and half of the

industry was in NSW.

Associate Director of the NSW Office for

Health and Medical Research Anne O’Neill

said the Medical Device Commercialisation

Training Program had the potential be to

a game changer not only for NSW but

for Australia in developing an alternative

career path for medical researchers.

Another graduate of the program Dr

Farzaneh Ahmadi, has recently been

awarded a $500,000 four-year grant to

further her work in developing an artificial

larynx which works by nerve stimulation

and does not require surgery.

The grant is to be provided by the

Garnett Passe and Rodney Williams

Memorial Foundation which supports

otorhinolaryngological research in

Australasia.

Graduates gave brief presentations on

their technologies before an audience

which included venture capitalists and

individual investors. In addition to Gho and

Weaver of LymphFabrics, and Ahmadi of

Bionic Voice, participants included:

• Dr Ilana Feain, Nano-X – who has

developed a portable radiotherapy

machine which should improve access

to cancer treatment in rural areas of

Australia and in poor regions around

the world;

• Dr Paul Keall, Breathe Well – device

which measures the breathing

patterns of patients undergoing

radiotherapy to minimise healthy

tissue being irradiated as a result of

uneven breathing disturbing the focus

of radiotherapy equipment;

• Dr Rylie Green, PolyBionics – tissue-

compatible coating developed from

materials used in contact lenses to

improve the performance of devices

such as the Cochlear ear and bionic eye;

• Dr Ali Fathi, Triumph-Gel – injectable

tissue-compatible glue for dental and

other surgical implants, particularly

beneficial where bone density is low;

• Dr Simone Bone and Evelyn Linardy,

SpeeDx – fast, simple, affordable

initial medical diagnosis device. The

device can distinguish heart attacks

among other causes of chest pains

and identify serious conditions such

as meningitis;

• Dr Nicky Bertollo, Kneevations – less

invasive arthoscopic treatment for

people who would otherwise require

surgery and total knee replacements;

• Dr Bakul Gupta, SwapNya –

nanotechnology-based smart contact

lenses which can be used to treat

common eye conditions which may

result in loss of sight;

• Ryan Pawell, indee – platform

technology for manufacturing cell

therapeutics for HIV, cancer and other

diseases;

• Dr Damian Conway, venipoc –

technology that tests for multiple

diseases - including HIV and ebola -

from a single blood sample;

• Dr Linda Varadi – fast-acting

treatment for sepsis (bacterial blood

infection);

• Dr Alexander Baume, WoundTest

– technology which identifies the

causes of chronic wounds, the key to

providing effective treatment;

• Dr Kyloon Chuah, Quiksense – rapid

highly accurate test for early stage

prostate cancer which can also be

used to identify recurrence of the

disease;

• Dr Roya Ravarian, Endoluminal

Sciences – advanced minimally

invasive heart valve treatment

technology which can avoid the need

for open heart surgery;

• Dr Paul Breen, HeMo – inexpensive

device which measures impedance

of blood flow in a limb, a key step

in diagnosing many serious medical

conditions;


• Dr Gaetano Gargiulo, Vital Core –

inexpensive “tee-shirt” style device

which serves as a cardio pulmonary

monitor and could substitute for

much more expensive technologies;

• Dr James Wood, State of the Heart –

an endovascular stent graft for repair

of aortic arch pathology.

The NSW Medical Devices Fund is a

$5 million per year competitive technology

development and commercialisation

program funded by the NSW government

through the NSW Ministry of Health

and the NSW Office of Health and

Medical Research.

In the first year, funding was boosted

to $8 million and over the first two annual

rounds, $16.4 million has been committed

to nine technologies. Round three will have

up to $6.7 million available.

Preliminary applications for the 2015-16

program are to close on 5 February.

PEOPLE MOVESFORMER AVCAL ChAIRMAN TAKES ON WEALTh MANAgEMENT ROLE

Former AVCAL chairman Andrew Rothery

has taken up a non-executive director

role with new Sydney-based independent

private wealth advisory partnership Koda

Capital.

Koda was set up late last year by former

JBWere head Paul Heath and former MLC

chief executive Steve Tucker.

Tucker left MLC, the wealth advisory arm

of National Australia Bank, last year.

Tucker points out that the wealth

advisory sector has long been dominated

by firms owned by issuers of investment

products including banks and other large

financial services businesses and this has

posed questions over the independence

of advice.

He said he found it puzzling that large

scale professional services firms, like those

found in law and accounting, had not

developed in financial planning.

“If you look at the landscape of wealth

advice, what we’ve seen in the traditional

structures of the last 30 years or so is

that whilst there’s been independents

and there’s been vertically integrated

businesses, over time the lines continually

blur and then separate and then blur and

then separate,” he said.

“Those structures have actually done

a pretty good job. They’ve provided

good and robust advice to millions

of Australians and they provide good

product outcomes. But because they

are so entangled, the challenge of

regulating them, to make sure customer

interests are put first – of a government

legislating – as we have seen with a few

rounds of FoFA (the federal government’s

Future of Financial Advice reforms), is

very complex …”

He said Koda would try to replicate

the independence and culture of a

professional services partnership with a

fees-based economic model that focused

solely on generating revenue for the client.

Heath said advances in technology had

enabled Koda to be set up with relatively

low fixed costs. It will, for example, use

the Powerwrap platform for investment

reporting and execution. Also, the

firm’s advisers will share in the profits

of the business as part of their overall

remuneration.

“We can genuinely make money by

giving advice rather that making money

by selling product,” Heath said.

Andrew Rothery founded Grant Samuel

Private Equity (later GS Private Equity)

and went on to co-found Archer Capital

which he left in 2006. He served as

chairman of AVCAL from 2009-2011.

Rothery resigned as a non-executive

director of MLC last year to enable him to

take up the Koda directorship.

INVESTMENT ACTIVITyLISTEd INSURANCE bROKINg gROUP TO ACqUIRE REhAbILITATION bUSINESS

Insurance broking and underwriting group

Austbrokers Holdings Limited (ASX:

AUB) is to acquire a 60 per cent stake

in rehabilitation and injury management

business Altius Group Pty Ltd.

Austbrokers has made a cash payment

of $13.6 million and will make a further

payment later this year based on 2015

financial year results but estimated to be

$3.45 million.

Altius provides services to insurers,

government bodies and businesses.

Established in 2000, the business has

annual revenue in excess of $14 million.

Austbrokers is Australia and New

Zealand’s leading equity-based insurance

distribution, underwriting agency and risk

services group.

The acquisition, announced on 30

January, continues Austbrokers Holdings

diversification strategy of investing in

service providers to the insurance sector.

Chief executive Mark Searles said:

“With the addition of Altius we expect

to significantly grow and enhance our

risk services area further removing

dependence on the insurance broking

distribution area for growth and mitigating

the effects of the insurance rate cycle.”

Founding directors Derick Borean and

Richard Forby are to remain with Altius

and retain a combined 40 per cent stake in

the business.

Allen & Overy provided legal advice to

Austbrokers and Minter Ellison to Altius.

PEOPLE MOVESLISTEd EqUITIES MANAgER APPOINTS FORMER PRIVATE EqUITy FIgURE

Former CHAMP Private Equity managing

director David Jones has been appointed

chairman of high conviction global listed

equities investment manager VGI Partners.

Investors in Sydney-based VGI are

mainly high net worth individuals, family

offices and endowment funds.

Jones’ other directorships include a

role as a non-executive director and

member of the investment committee of

resources private equity fund manager

EMR Capital, manager of the EMR Capital

Resources Fund.

Since he left CHAMP in 2011, Jones has

focused on the renewable energy sector.

He initially joined Better Place Australia

as an executive team member under chief

executive Evan Thornley, co-founder of

search engine company LookSmart.

Israel-founded Better Place failed in

2013 when it became clear the company’s

“quick drop” battery change technology

was not gaining traction with car makers.

Jones is now chief executive of solar

energy generation systems leasing

company Kudos Energy. Kudos Energy

received a $30 million investment from the

Clean Energy Finance Corporation (CEFC)

in 2013.


Kudos designs and installs solar

photo voltaic installations for the roofs

of commercial premises and apartment

blocks with the owners entering into

power purchase finance agreements to be

supplied with power at discounted rates.

The Coalition federal government is

committed to abolishing the CEFC, which

was established by the former Labor

administration, but its attempt to do so in

2013 failed in the Senate.

PEOPLE MOVESLOCAL INNOVATOR RECRUITS FORMER ExECUTIVE OF PRIVATE EqUITy-bACKEd COMPANy

Payments technology company Indue

has recruited the former local managing

director of US-based First Data, a Kohlberg

Kravis Roberts (KKR) investee.

John Tait is joining Brisbane-based Indue

as executive director, strategic development

and distribution and will be based in the

company’s Chatswood, Sydney, office. Tait

was with First Data for 13 years and prior to

that spent six years with National Australia

Bank’s global payments division.

Indue provides customised services

to a range of finance providers including

building societies, mortgage originators,

boutique banks and credit unions.

Tait said he had been attracted to Indue

after watching its transformation over

ten years from a conservative payments

provider with a narrow offering to a

diversified supplier of innovative payment

solutions with appeal to a broad market

in Australia and overseas. Increasingly,

he said, large organisations were turning

to innovators like Indue to deliver

technological change quickly and more

efficiently than they could do themselves.

Indue chief executive Manuel Garcia, also

a former National Australia Bank executive,

said the recruitment of an industry expert

of Tait’s experience illustrated the success

of Indue’s change of focus.

INVESTMENT ACTIVITyINTERNATIONAL FIRM MAKES FIRST INVESTMENT IN MALAySIA

US-based international smaller companies

specialist private equity firm The Riverside

Company has made its first investment in

Malaysia, acquiring value-added specialty

chemicals distributor Drex-Chem Malaysia

for an undisclosed sum.

Drex-Chem Malaysia has relationships

with more than 50 international chemical

companies and provides a portfolio of

about 700 branded products to more than

700 customers.

Riverside managing partner Stu Baxter

said the company had strong technical

capabilities and a knowledgeable

salesforce. “It’s easy to see why many of

the world’s premier chemical companies

trust Drex-Chem to represent them in

Malaysia,” he said.

Customers include some several of

the largest global paint and coatings

companies as well as leading consumer

goods companies.

Jones Day, Ernst & Young and

DistriConsult advised Riverside on the

transaction. HSBC provided loan funding

for the deal.

INFORMAL VENTURE CAPITALACCELERATOR TO TAKE START-UPS TO ChINA

Telstra-backed technology accelerator

muru-D is to take its current batch of start-

up businesses to China next month (March).

Sydney-based muru-D is also seeking

to attract Chinese technology start-ups

to Australia.

The muru-D team say that historically

the Australian technology start-up scene

has focused almost exclusively on the US

market but this is starting to change with

the rise of China.

Muru-D’s current group of start-ups – its

second group – have each been asked to

think about a China market strategy, to seek

investment and advice from the Australia

Chinese community and to spend time in

China developing customers and seeking

investment.

The start-up teams have already met

with Australian investors and advisers from

Chinese backgrounds at a special investor/

advisor meeting.

The muru-D class #2 comprises:

• CrowdSourceHire – online

platform for assessing the skills of

applicants for technical roles using

crowdsourced industry experts.

• Disrupt – creator of custom

surfboards and other sporting goods

using 3D modelling.

• Fanfuel – platform to help brands

that sponsor athletes improve the

way they monitor the sponsored

athlete’s performances on social

media.

• Freight Exchange – digital

marketplace to enable long distance

freight carriers to connect with

customers to sell excess capacity.

• Funetics – Online phonetic platform

to help speakers of other languages

master English pronunciation and

comprehension.

• Instrument Works – Simplified

system for data collection using

sensor devices connected through

the internet and controlled by

smartphones.

• SoccerBrain – platform for soccer

clubs to manage coaching, training

and development of players.

• Tripalocal – online platform to

connect travellers with providers of

unique local experiences.

• Vclass – hybrid education platform

that combines internet, VoIP and pen

and paper work to create an online

learning experience more like a face-

to-face class.

• Wattblock – quick, customised, web-

based energy saving roadmaps for

residential and strata buildings.

• You Chews – online catering platform

to make it easy to find great food for

meetings and events.

PEOPLE MOVESLEAdINg INVESTMENT bANKER STEPS dOWN

Leading investment banker John Wylie

has retired as chief executive of corporate

advisory firm Lazard Australia.

Melbourne-based Wylie stepped down

at the turn of the year to be replaced by

Lachlan Edwards and Andrew Leyden as

joint chief executives.

Wylie will now act as a special advisor

to Lazard on a limited number of client

matters and will also remain involved with

Lazard Australia Private Equity.

After heading Credit Suisse First Boston

in Australia and leading deals such as the


privatisation of Qantas, Wylie founded

Carnegie Wylie with Mark Carnegie in

2000. That business was acquired by

Lazard in 2007.

Aside from advisory work, Wylie is an

active private investor.


REARVIEW MIRROR

5 yEARS AgO... FEbRUARy 2010FUNd INCREASEd PRIVATE EqUITy ExPOSURE dURINg gFC

Industry superannuation fund UniSuper

increased its exposure to private equity

and venture capital by $122 million over

the global financial crisis year of 2008-

09 but most of the increase was in

international rather than Australian funds.

Exposure to the Australian sector

increased by $20 million, from $246

million to $266 million. The increase

to the international sector went up

$102 million, from $430 million to

$532 million.

The increase in the Australian sector

was almost entirely in private equity.

The largest increases were $12 million to

Quadrant Private Equity Fund 2 (up from

$20 million in 2008 to $32 million); $12

million to CHAMP Buyout Fund 2 (up from

$27 million to $39 million) and $11 million

to Archer Capital Fund 4 (up from $5

million to $16 million).

Other Australian private equity funds

to which UniSuper increased its exposure

were Archer Capital Growth Fund 1 $5

million (up from $2 million to $7 million);

Advent Fund 5, $3 million (up from $6

million to $9 million); Wolseley Partners

2, $3 million (the first drawdowns by the

fund); CHAMP Investment Trust 6 $2

million (up from $5 million to $7 million);

Ironbridge Fund 2, $2 million (up from $19

million to 21 million) NBC Private Equity

Fund 3, $1 million (up from $6 million to

$7 million) and Hastings Private Equity

Fund 2, $1 million (up from $11 million to

$12 million).

Exposure was increased to only one

Australian venture capital fund, Innovation

Capital Fund 2, $1 million (up from $4

million to $5 million).

The largest increase in UniSuper’s

exposure to international private equity

and venture capital was to the NGP M&R

Offshore Fund, $26 million (up from $10

million to $36 million). This fund invests

in energy infrastructure and natural

resources operations.

As at June 30 2009, UniSuper had $1.95

billion in alternative assets. Apart from

private equity and venture capital, this

included $778 million in Australian and

overseas infrastructure (down $38 million

from $816 million). Total assets under

management were $21.774 billion

10 yEARS AgO... FEbRUARy 2005gS PRIVATE EqUITy ANd PACIFIC EqUITy PARTNERS dIg dEEP

In a 50:50 joint venture, GS Private Equity

and Pacific Equity Partners (PEP) purchased

the earthmoving equipment company

Emeco International Pty Ltd in December in

what they say was the biggest private equity

deal completed in Australia in 2004.

The enterprise value of the deal has not

been revealed but is reliably believed to be

around $460 million.

The two private equity houses have put in

over $50 million each and management hold

a large, over 20 per cent interest.

Emeco rents and sells earth moving

equipment such as excavators, dump trucks,

bulldozers and loaders, plus parts, mainly

in Australia, where it is said to be market

leader, and in Indonesia and more recently

the United States.

PEP managing director Paul McCullagh

said the strategy for growing Emeco’s

business would involve taking full advantage

of opportunities presented by the strong

Australian mining sector and the company

would now have sufficient capital to do this.

GS Private Equity partner Greg Minton

said the joint venture partners would be

looking for opportunities to expand the

business both organically and through

acquisition.

Growth opportunities include

consolidation in the Australian market and

an increasing international presence, said

w---wMr McCullagh.

It is a very strong business and is growing

within a growing market, he said. It has good

market share, and a very efficient business

model. There is a shift underway with mining

companies choosing to focus on exploration

and development and hiring, rather than

worrying about equipment.

Emeco and its sale advisor Deutsche Bank

said the benefits of partnering with two

leading private equity firms included greater

access to capital as well as to strategic

advice.

The company will retain its current

management team under managing director

Laurie Freedman.

Emeco is the third investment for the PEP

II fund following the Angus & Robertson

book stores deal in May 2004 and New

Zealand aged care business Guardian in

November.

20 yEARS AgO... FEbRUARy 1995AdVENT LEAdS $12M hEALTh CARE SyNdICATE

Advent Ltd has lead a syndicate of

institutional investors to invest up to $12

million in Sydney based Primary Health Care

Pty Ltd (AVCJ Dec 1994). The syndicate will

hold 40 per cent of the company. Advent

has committed $6.5 million and has the

right to appoint two directors.

Primary Health Care specializes in

integrated primary health care services


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.

through two medical facilities on Sydney’s

North Shore. The centres are two of the

largest in Australia, and the company has

100 staff.

The business has grown profitably in

recent years and is on schedule to meet

revenue and profit budgets for 1994-95.

The company has a number of solid

expansion opportunities and the new cash

injection will be used to fund this growth.

Dr Edmund Bateman, who leads the

management team and is the major

partner, said that Primary Health Care

is demonstrating how a full range of

high quality medical services including

specialists, day surgery, dental, pharmacy

and other para-medical services as well

as general practice can be delivered cost

efficiently to fully address the needs of the

public.

Managing director of Advent Ltd, Noel

Bond, said Advent believes that this

approach to establishing well equipped,

large primary health care facilities could

expand and become an accepted solution

to controlling growing health budgets.

“Advent strongly supports Dr Bateman

in the view that the approach leads to

fulfilment of community needs consistent

with similar trends in the US and elsewhere.”


COMING EVENTS

10-11 FEBRUARY

APIDAYS – ENABLING DIGITAL

BUSINESS, MOBILE, THE INTERNET

OF THINGS AND THE COMPOSABLE

ENTERPRISE.

Sydney. Sixtree, OAuth.io.

syd.apidays.io

12 FEBRUARY

NExTGEN (YOUNG PROFESSIONALS)

LAUNCH.

Melbourne. Turnaround Management

Association Australia.

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

17 FEBRUARY

CANBERRA MANAGER’S FORUM

– Gary Sterrenberg, Chief Information

Officer Department of Human Services.

Canberra. Australian Information Industry

Association:

www.aiia.com.au/events/event_list.asp

18 FEBRUARY

THE WEST TECH FEST AND

OzAPP AWARDS

(brings global tech entrepreneurs and

investors together with Asia-Pacific start-

ups). Perth. OzApp Awards.

Email: [email protected]

18 FEBRUARY

ECONOMIC OUTLOOk – DR DOUG

MCTAGGART, SUNCOP GROUP.

Brisbane. Turnaround Management



20 FEBRUARY

NICTA TECHFEST 2015.

Sydney. NICTA.

www.nicta.com.au/events

18 MARCh

DARRELL LEA – SAVING AN

AUSTRALIAN ICON.

Brisbane. Turnaround Management



23-25 MARCh

CREATIVE INNOVATION 2015.

MELBOURNE.

Baldwin Consulting Group.

www.creativeinnovationglobal.com.au/

Ci2015

24-25 MARCh

AUSTRALIA-CHINA BUSINESSWEEk

2015.

Melbourne. ABF Events.

www.ABF.Events


25-27 MARCh

DIGITAL MARkETING FOR BANkING &

FINANCIAL SERVICES SUMMIT.

Sydney. IBR Conferences.

www.ibrc.com.au

27 MARCh

AUSTRALIA-CHINA BUSINESSWEEk

2015.

Hobart. ABF Events.

www.ABF.Events


22 APRIL

SLUSH DOWN UNDER

(launch platform for local start-ups run

in collaboration with organisers of Slush,

Northern Europe’s largest tech start-up

event). Melbourne. Startup Victoria.

www.startupvictoria.com.au/events

26 FEBRUARY

AVCAL CONNECT – PRESENTATION BY

LAURA MCkENzIE, SCALE INVESTORS.

Melbourne. AVCAL.

www.avcal.com.au/events

26 FEBRUARY

NExTGEN (YOUNG PROFESSIONALS)

LAUNCH.

Sydney. Turnaround Management



4 MARCh

INSPIRATIONAL WOMEN’S BREAkFAST

Sydney. Turnaround Management


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

php?cat=1#259

4-6 MARCh

12TH ANNUAL PRIVATE EQUITY &

VENTURE FORUM, AUSTRALIA & NEW

zEALAND 2015.

Sydney. Asian Venture Capital Journal.

www.avcjausnz.com

4-6 MARCh

12TH ANNUAL PRIVATE EQUITY &

VENTURE FORUM, AUSTRALIA & NEW

zEALAND 2015.

Sydney. Asian Venture Capital Journal.

www.avcjausnz.com

12 MARCh

21ST AIMIA AWARDS (DIGITAL

INDUSTRY AWARDS).

Sydney. Sydney. AIMIA.

aimia.worldsecuresystems.com


ShARE ChART

LAST SALE AT ENd OF MONTh AUSTRALIAN LISTEd PRIVATE EqUITy FUNdS/ INVESTMENT COMPANIES

INVESTORS/ MONTH Jan-15 Dec-14 Nov-14 Oct-14 Sept-14 Aug-14 Jul-14 Jun-14 May-14 Apr-14 Mar-14 Feb-14

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 0.001 0.001

Acrux (ASx: ACR) 1.520 1.175 1.315 1.085 1.540 1.975 1.835 1.005 0.870 1.035 1.72 2.100

APN Outdoor group (ASx: APO) (quadrant Private Equity)

2.650 2.510 2.500

Appen (ASx: APx) (Anacacia Capital) 0.565

Arowana Australian Opportunities Fund (ASx: ???)

1.000

Arowana International Ltd (ASx: AWN) 0.940 0.930 0.980 1.000 0.985 0.980 0.915 0.902 0.900 0.890 0.785 0.600

Authorised Investment Fund (ASx: AIy) 0.025 0.025 0.025 0.025 0.025 0.028 0.028 0.025 0.020 0.026 0.026 0.029

biotech Capital (ASx: bTC) 0.095 0.085 0.081 0.077 0.051 0.051 0.026 0.025 0.020 0.023 0.025 0.021

billabong International (ASx: bbg) (Centrebridge Partners/ Oaktree Capital)

0.635 0.685 0.650 0.685 0.700 0.540 0.535 0.500 0.485

blue Sky Alternatives Access Fund (ASx: bAF)

0.970 0.960 0.975 0.950 0.960 0.980 0.990 0.990

blue Sky Alternative Investments (ASx: bLA)

2.880 2.680 2.810 2.800 2.890 2.870 2.91 2.950 2.500 2.340 2.400 2.090

bPh Energy Ltd (ASx: bPh) 0.006 0.007 0.008 0.007 0.011 0.010 0.009 0.008 0.009 0.008 0.010 0.012

burson group (ASx: bAP) (quadrant Private Equity)

2.400 2.340 2.430 2.380 2.500 2.300 2.24 2.120 1.940

Calibre group (ASx:Cgh) (First Reserve) 0.300 0.280 0.345 0.380 0.370

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

0.535 0.320 0.335 0.360 0.385 0.415 0.330 0.330 0.335 0.415 0.415 0.410

ClearView Wealth (ASx: CVW) (Crescent Capital)

0.900 0.920 0.935 1.070 1.075 0.885 0.800 0.800 0.820 0.760 0.735 0.700

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

Exited Exited Exited Exited 2.180 2.270 1.825 1.885 2.380

CVC Limited (ASx: CVC) 1.430 1.470 1.405 1.520 1.500 1.440 1.490 1.420 1.250 1.180 1.230 1.180

dick Smith holdings (ASx: dSh) (Anchorage Capital)

Exited Exited Exited Exited Exited 2.280 2.020 1.960 2.150

disruptive Investment group (ASx: dVI) 0.015 0.009 0.010 0.009 0.012 0.008 0.010 0.014 0.016 0.190 0.250

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

5.260 5.290 5.200 5.490 5.390 5.150 5.000 5.190 5.060 5.200 5.160 5.500

grandbridge (ASx: gbA) 0.064 0.035 0.035 0.032 0.040 0.044 0.044 0.033 0.060 0.060 0.064 0.064

greencross (ASx: gxL) (TPg) 7.620 7.620 8.470 8.600 9.800 10.000 10.400 9.240

healthscope (ASx: hSO) (Carlyle group/ TPg Capital)

2.650 2.650 2.560 2.540 2.440 2.240 2.260

Infratil (ASx: IFZ) 2.350 2.350

Invigor group (ASx: IVO) 0.053 0.069 0.072 0.080 0.073 0.090 0.100 0.035 0.040 0.040 0.053 0.020

iSentia group (ASx: ISd) (quadrant Private Equity)

2.820 2.820 2.890 2.900 2.940

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

0.010 0.069 0.076 0.079 0.085 0.175 0.210 0.235 0.180 0.180 0.210 0.280

Lion Selection group (ASx: LSx) 0.250 0.200 0.250 0.300 0.310 0.395 0.350 0.300 0.400 0.455 0.050 0.510 Continued ➤


ShARE ChART

Mantra group (ASx: MTR) (CVC Asia-Pacific UbS)

2.800 2.680 2.780 2.370 2.340 2.060 1.960 1.800

Metro Performance glass (ASx: MPP NZx: MPg) (Crescent Capital)

1.780 1.750 1.800 1.790 1.700 1.590

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

1.305 1.410 1.395 1.375 1.730 1.650 1.745 1.765

NSx Limited (ASx: NSx) 0.074 0.074 0.130 0.130 0.130 0.067 0.100 0.100 0.115 0.170 0.170 0.170

Oceania Capital Partners (ASx: OCP) 1.385 1.385 1.275 1.380 1.450 1.440 1.500 1.370 1.450 1.460 1.500 1.500

OOh!Media (ASx: OML) (ChAMP Private Equity)

2.030

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

0.510 0.500 0.550 0.570 0.580 0.570

Pioneer Credit (ASx: PNC) (banksia Capital)

1.870 1.750 1.800 1.710 1.790 1.600 1.560 1.580

qRx Pharma (ASx: qRx) (Uniseed) 0.021 0.017 0.019 0.019 0.023 0.029 0.750 0.080 0.095 0.094 0.770 0.860

q Technology group (ASx: qTg) (helmsman Capital)

0.009 0.009 0.013 0.016 0.020 0.022 0.031 0.028 0.021 0.015 0.020 0.017

Speedcast International (ASx: SdA) (TA Associates)

1.850 1.745 1.880 1.960 2.060 2.010

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

1.880 1.900 1.940 1.895 1.810 1.920 1.850 1.650 1.820

Techniche Limited (ASx: TCN) 0.084 0.076 0.079 0.075 0.085 0.890 0.088 0.770 0.064 0.065 0.070 0.094

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

14.740 14.750 15.700 13.990 19.130 22.780 23.270 24.110 30.000 28.980 36.88 37.360

FUNdS OF FUNdS

IPE Limited (ASx: IPE) 0.305 0.321 0.310 0.355 0.345 0.395 0.445 0.495 0.480 0.460 0.465 0.440

australian private equity & venture capital journal // february 2015

Economy & Finance