5678.0 - Venture Capital and Later Stage Private Equity, Australia, 2012-13 Quality Declaration 
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GLOSSARY

ADI

An authorised deposit-taking institution, i.e. a bank or credit union, etc.

Committed funds

Capital pledged by investors, representing the maximum amount that the fund may drawdown from investors.

Debt securities

Borrowings which may be traded on secondary markets. Short term debt securities include bills of exchange, commercial paper and promissory notes. They generally have an original term to maturity of 30 to 180 days. Long term debt securities have an original term maturity of more than one year, and include bonds, debentures, convertible notes, and non-participating preference shares. They do not include derivatives.

Drawdowns from investors

For VC&LSPE investment vehicles, this represents the amount of capital committed by investors that is actually transferred to a VC&LSPE investment vehicle in aggregate for the life of the fund, and is also known as paid-in capital. For VC&LSPE investee companies, drawdowns from investors represents paid-up capital as at the end of the year.

Follow-on investment

A subsequent investment made by an investor who made a previous investment in the company; generally equal to a later stage investment in comparison to the initial investment.

Fund of funds

This type of fund pools investments from a diverse range of investors and mainly places its investments with other VC&LSPE investment vehicles who then invest in investee companies. Fund of funds may directly invest in unlisted companies, but these investments are typically undertaken as a co-investment with another VC&LSPE manager.

Investee company

The company in which the venture capital or later stage private equity investment has been made.

IPO

Initial Public Offering (IPO) is a type of public offering where shares of stock in a company are sold to the general public, on a securities exchange, for the first time.

Late Expansion

Current product improvement or new product development. Continued revenue growth. Approaching, or at, profitable operating levels.

Later stage private equity

An investment in companies in the late stage of expansion, turnaround and buy-out or sale stage of investment. The risks are still high and investors have a divestment strategy with the intended return on investment mainly in the form of capital gains (rather than long-term investment involving regular income streams).

LBO/LBI/MBO/MBI

Leveraged buy-out/in (LBO/LBI) and management buy-out/in (MBO/MBI) involve the acquisition of a product or business from either a public or private company often utilizing a significant amount of debt and little or no equity.

Life insurance offices

Life insurance offices must be registered with the Australian Prudential Regulation Authority (APRA). Life insurance offices offer insurance for death or disability and also offer investment and superannuation products. Generally, they have the word “life” in their legal name. They include friendly societies, but exclude insurance companies offering house, car and marine insurance.

Listed shares and units

Shares in resident companies and units in resident trusts quoted on the Australian Stock Exchange (ASX). Does not include equity derivatives or shares in foreign companies.

Non-residents

Any individual, business or other organisation domiciled overseas. Foreign branches and foreign subsidiaries of Australian businesses are regarded as non-residents.

Paid-in Capital

See Drawdowns from investors.

Pension funds

Provide benefits for their members on retirement, resignation, death or disablement. A superannuation fund usually takes the legal form of a trust fund. Includes pooled superannuation trusts (PST), approved deposit funds (ADF) and public sector superannuation funds.

Pre-seed

An investee company in the process of setting up. Product is in research and development stage.

Privately-owned trading companies

Privately-owned trading companies are those owned and controlled by the private sector and produce goods or non-financial services for sale at market prices.

Residents

Any individual, business or other organisation domiciled in Australia. Australian branches and Australian subsidaries of foreign businesses are regarded as Australian residents.

Sale/IPO/Listing

The investment in a business with the intention of listing it on the stock exchange, eventually offering shares to the public.

Seed

An investee company in the process of setting up. Product at testing or pilot production stage.

Start-up

The investee company is not yet fully operational. May or may not be generating revenue.

Trading enterprises

Those businesses which are owned and controlled by all levels of governments and which produce goods or non-financial services for sale at market prices.

Trust funds

Public unit trusts issue units to the general public within Australia and invest the pooled monies. They must have registered a prospectus with the Australian Securities and Investment Commission (ASIC). Some are listed on the ASX. There are two broad types of public unit trusts: property and trading trusts; and financial trusts such as mortgage, fixed interest and equity trusts.

Turnaround

Financing provided to a company at a time of operational or financial difficulty with the intention of improving the company's performance. The company may not be profitable, its product turnover stagnant and/or with flat or declining revenue.

Unincorporated business not elsewhere covered

Trading businesses operated by persons either as sole proprietors or in partnerships with other persons. They do not operate through a company structure.

Unlisted equity

Equity in resident unlisted trusts and resident unlisted participating preference shares.

Unrealised gains/losses

The change in the market value of any equity that will only be realised on the sale of the equity.

Vehicle

Funds or pooled funds (where capital is sourced from the fund manager and investors) for investment in investee companies and are mainly organised in the form of either trust funds or corporations.

Venture Capital

High risk private equity capital for typically new, innovative or fast growing unlisted companies. A venture capital investment is usually a short to medium-term investment with a divestment strategy with the intended return on investment mainly in the form of capital gains (rather than long-term investment involving regular income streams).

Write Offs

Writing down of a portfolio company's holdings to a valuation of zero, with the fund receiving no proceeds from their investments.