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ANALYSIS OF RESULTS
DRAWDOWN FROM INVESTORS BY INVESTOR TYPE, Percentage of total investment in VC&LSPE vehicles - 2006-07
VC&LSPE MANAGERS AND INVESTMENT VEHICLES
The VC&LSPE manager is generally a skilled business person and financial analyst. The gathering of commitments from investors takes a considerable amount of time, as does the process of evaluating potential investees. The survey identified 186 active VC&LSPE managers who were managing 280 VC&LSPE investment vehicles.
The value of total assets held by VC&LSPE investment vehicles was widely dispersed, from 137 investment vehicles having less than $10m in assets, to 32 with more than $80m in total assets (see the preceding graph).
Investment vehicles had total expenditure of $453m during 2006-07, just under half of which was for management fees ($191m, compared to $162m during 2005-06). Total income increased to $389m, driven mainly by an increase in other inflows ($117m in 2006-07 compared to $54m in 2005-06).
VC&LSPE funds used various valuation methods (refer to paragraph 14 of the Explanatory Notes). The AVCAL method was most frequently used, with 149 vehicles using this method in 2006-07, followed by book value/cost valuation methods (49) and directors' valuation (44).
Of the $7,208m that had been invested in the 1076 investee companies (deals) at June 2007, $2,371m was invested in new projects during the 2006-07 financial year (up by $871m or 58% on 2005-06), with additional investments in existing projects of $502m (up $155m or 45%). See table 2 for more details.
The preceding graph indicates that in 2006-07, the majority of deals made by VC&LSPE vehicles were with investee companies established for between two and four years (41%). Investee companies in the five to 10 year category accounted for 29% of deals in 2006-07.
See paragraph 12 of the Explanatory Notes for a definition of the VC&LSPE stages referred to in the above graph.
VC&LSPE arrangements typically do not involve a level of controlling equity by a single VC&LSPE vehicle in investee companies, with most deals having less than 40% ownership by any one investment vehicle, as the above graph illustrates. However, it is worth noting that more than one fund manager may invest in the same investee company or a fund manager may manage more than one vehicle investing in an investee company.
The graph above shows the distribution of the value of investment placed by VC&LSPE managers in individual investee companies. Most deals attracted less than $10m from any one investment vehicle, but the proportion receiving greater than $20m has been steadily increasing over the past four survey years.
The graph above indicates that most of the value of VC&LSPE investment was in investee companies with head offices in NSW and Victoria (with 33% and 22% respectively at June 2007). The current value of investee companies with head offices in NSW increased by $904m compared to 2005-06, and Victoria rose by $554m. The current value of investments by Australian vehicles in investee companies domiciled overseas remained significant, increasing (up by $400m) to $1,230m in 2006-07.
VC&LSPE vehicles invested in a wide range of industries. Of the total value of $7,208m invested in 2006-07, Finance and Property became the predominant industry of investment, with investments at the end of the year of $1,703m (24% of the total). The current value of investments expressed as a proportion of total investments increased in the Manufacturing and Utilities industries (to 24% of total investments), Health and Services industries ( to 13% of total investments) and Construction industries (to 1% of total investments). All other industries recorded decreases in their percentage of total investment.
When analysed by activity, as defined by the Standard and Poors Activity Classification, the Manufacturing and Transport related activities attracted the largest share of investment, with $2,732m or 38% of total investment for 2006-07. Retail, Services and Real Estate with $2,237m (31%) and Biotech, Pharmaceuticals and Health activities with $1016m (14%) also attracted large shares of the total investments as at the end of June 2007.
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