Document Sample

take on deals which occur in the UK.                     which it shares a modern building. The incubator           areas developing technology corridors to the mutual
     From the unions’ point of view, shareholder         offers state of the art office facilities, meeting rooms   benefit of universities and businesses. Macquarie
loans are an example of the private equity industry      etc plus access to chemistry, biotechnology and            University in north western Sydney’s IT and
gaining an advantage over other sectors of business,     electronics laboratories.                                  communications industry belt was ideally located for
an advantage that it uses to take over companies              Companies within the incubator can take               this, he said.
that it then restructures with a loss of jobs.           advantage of cost effective access to professional             The recently appointed managing director of
     The private equity industry, however, argues that   services such as accounting, legal, human resources,       Access Macquarie Ltd, former merchant banker and
any special tax on private equity deals will simply      marketing and commercialisation advice.                    academic Peter Dodds, pointed to other specific
send offshore an industry that is strong and growing          Incubator companies can also access the               areas that the incubator could assist such as medical
in the UK and contributes toward London’s status as      University’s internship program that takes the top         and bioscience technologies.
the financial capital of Europe.                         10 per cent of business students studying for MBAs             A stronger research and commercialisation base
     Any results from the review are not expected        and masters degrees from the Macquarie Graduate            would encourage Australian entrepreneurs to retain
until later in the year.                                 School of Management and Macquarie International.          their technologies in this country rather than selling
     Chancellor of the Exchequer Gordon Brown did             The program provides businesses with access           them to multinationals at the first opportunity. This
not single out private equity for attention in his       to one of these students free of charge to work on         could result in the development of more Australian-
Budget speech on 21 March but legislation which will     specific projects over a semester.                         based multinational businesses.
affect the industry is expected to be included in the         Six university spin-off businesses are already            He said Access Macquarie already had a track
following Finance Bill.                                  located in the MTBI and there is space for a further       record in nurturing successful businesses and
     Law firm SJ Berwin has warned the industry          10 tenant businesses.                                      nominated semiconductor developer BlueGlass Pty
to look out for action against “avoidance through             Vice-chancellor Schwartz told visitors business       Ltd, which listed on the ASX in September, as a
arbitrage” – provisions that will target arrangements    incubators had proven effective in greatly reducing        stand out example.
which exploit differences in tax treatment across        the proportion of new ventures that failed in their            Deloitte has ranked the company as the fifth
countries, and which involve hybrid entities or          first few years. A study by the US National Business       best performing IPO since listing.
financial instruments.                                   Incubation Association had shown that while overall            Other MTBI incubator success stories include:
                                                         the majority of new businesses failed within two               Image Connections Australasia Pty Ltd – which
                                                         years the success rate of those coming out of              has achieved profit within 12 months of beginning
INcUbAtOR	SEEN	AS	A	StEP	tOWARD	                         business incubators was 87 per cent.                       operations
DEvElOPING	lOcAl	SIlIcON	vAllEy                               University business incubators also had a strong          Applimex Systems Pty Ltd – which produces
Vice-chancellor Steven Schwartz has suggested            record in taking research that might otherwise have        advanced enzyme technologies that are attracting
Macquarie University’s new business incubator can        gone no further than academic study and using it to        both Australian and international customers. The
have a key role to play in developing a Silicon Valley   provide benefits to the community that had paid for        company is on track to break even in the current
in northern Sydney.                                      the research in the first place, he said.                  financial year
     Vice-chancellor Schwartz was speaking at the             The process of combining academic innovation              Venture capital business Venture Axess is
official opening of Macquarie Technology Business        with business acumen had very real benefits for the        providing commercial support to MTBI.
Incubator (MTBI).                                        national economy and business incubators could be              Executive chairman of Venture Axess, Geoff
     MTBI is located on the edge of the                  a starting point for this process.                         Mullins, is chairman of a group that is working to
university campus and is run by the university’s              University-based incubators could promote             establish the Pacific Technology Corridor on the lines
commercialisation arm, Access Macquarie Ltd, with        commercial research and development in adjacent            of the US West Coast Silicon Valley and Ireland’s

AUStRAlIAN	vENtURE	cAPItAl	JOURNAl			APRIL 2007                                                                                                                  paGe 22

Atlantic Technology Corridor. The venture has the        assets that will prove of enormous value to Principle.     tax of over $40 million on a 17.3 per cent stake in
backing of 11 northern Sydney councils.                  The MTAA fund has been one of the more innovative          Veda Advantage which it has held for two years.
                                                         funds in how it has invested in this asset class – 43          In January the consortium indicated an offer
                                                         per cent of its assets are in alternatives – having        of $3.61 per share, adjusted for any future
PlAcEmENt	AGENt	APPOINtS	FORmER		                        started going down this path in 1996.”                     dividends, for 100 per cent of Veda Advantage.
SUPER	FUND	tRUStEE	AS	chAIRmAN	                              Mr Rickus said: “The MTAA’s decision to invest         This represented a 32 per cent premium to Veda
Super funds’ increasing focus on alternative             in alternatives was prompted, in large part, by the        Advantage’s three-month volume weighted average
assets has been recognised by placement agent            knowledge that the privatisation of state-owned            share price of $2.73 to the close of trading on
Principle Advisory Services in the appointment           assets would release a lot of value once they had to       January 29. The offer valued the company at $814
of former Motor Trades Association of Australia          operate under market conditions. The board, with           million on an equity basis and $963 million on an
Superannuation Fund (MTAA Super) trustee John            the advice of Access Economics, realised this was a        enterprise value basis.
Rickus as chairman.                                      once in a lifetime opportunity.                                On 2 April, independent directors of Veda
    Mr Rickus was independent chairman of MTAA               “At the same time other funds were wary of             Advantage unanimously endorsed the proposal. They
Super from 1996 until late last year.                    these assets because they feared it would mean             recommended that shareholders vote in favour in
    Announcing the appointment, founder and              a lack of liquidity. But that was never going to be        the absence of a superior proposal and subject to an
managing director of Principle, Les Fallick, said Mr     an issue. The cash flow coming into these funds            independent expert’s conclusions in relation to the
Rickus would bring “a wealth of experience” to the       guaranteed that.”                                          scheme.
consultancy about how super funds approached their           Mr Rickus has a background in financial services           The deal will be the first in Australia completed
investment in alternative assets.                        and business.                                              by Merrill Lynch Global Private Equity.
    “There’s a bit of the gamekeeper turned poacher          Principle has extensive local institutional investor       AEP’s holding in Veda Advantage resulted from
in this story,” said Mr Fallick.                         network and international relationships. The firm          a 2005 bid for the company then known as Baycorp
    “For more than a decade Rickus was a trustee         specialises in capital raising and the develooment of      Advantage, the name under which it still trades. AEP
of one of the fastest growing and best performing        alternative investment products for the institutional      allowed its final offer of $3.59 per share to lapse in
funds in the country. In the 10-year period that he      investment market. Principle raised over $750              October 2005. The bid was AEP’s first attempt at an
was at the helm, funds under management grew             million last year on behalf of five alternative assets     on market takeover after its listing late in 2004.
from $400 million in 1996 to $4.2 billion as at          managers.                                                      Veda Advantage shares were trading at around
December 2006, growth that was fuelled in large                                                                     $3.27 on March 27; they increased to around $3.51
part by its innovative approach to alternative assets.                                                              on 3 April following recommendation of the bid.
    “Principle, which specialises in the development     PEP	AND	mERRIll	lyNch	tO	tAKE	
and distribution of alternative assets investment        vEDA		
products to the institutional market, can only benefit   –	AEP	tO	tAKE	cASh	                                        bOttlER	RESUlt	FOR	hAStINGS	
from having someone of Rickus’ depth of knowledge        Pacific Equity Partners (PEP) and Merrill Lynch            PRIvAtE	EqUIty	
about the industry on our board.                         Global Private Equity’s bid for ASX-listed business        Hastings Private Equity has exited bottle closure
    “Principle sees the super funds as our real          intelligence services company Veda Advantage has           maker Auscap Holdings with a 1.7 times money
clients, and John knows how these funds tick, what       been recommended to shareholders.                          return on its investment after 19 months.
services they require, and what they will need going         Assuming the deal goes through by scheme                   The investment, made in May 2005, was the first
forward,” said Mr Fallick.                               of arrangement as planned, Allco Equity Partners           for Hastings Private Equity Fund 2.
    “But it’s particularly his advice on alternative     Limited (AEP) will achieve a cumulative profit before          Hastings provided replacement capital for the

AUStRAlIAN	vENtURE	cAPItAl	JOURNAl			APRIL 2007                                                                                                                  paGe 23

Shared By: