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ANALYSIS OF RESULTS
VC&LSPE MANAGERS AND INVESTMENT VEHICLES
The survey identified 117 active VC&LSPE managers who were managing 239 VC&LSPE investment vehicles. Of the 117 active VC&LSPE managers, 46% of VC&LSPE managers reported that they prefer to invest in Venture Capital (VC) investments only, 23% prefer Later Stage Private Equity (LSPE) investments only and 31% prefer to invest in both VC and LSPE investments (see Explanatory Note 12 in reference to the stages of investment referred to by the terms - Venture Capital and Later Stage Private Equity).
VC&LSPE managers received income in the form of management fees ($198m). In 2011-12, fund managers spent on average 3.6 days a month per investee company. This compares with 4.6 days in 2010-11 and 4.0 days in 2009-10 (see table 14 in datacube).
Stage of investment preference for VC&LSPE managers with total assets of less than $10m, mostly focused on VC investments only (62%), while VC&LSPE managers with assets of $25m or more prefer to focus on LSPE investments (44%).
VC&LSPE investment vehicles had net assets of $8,385m as at 30 June 2012, a fall of $1,876m from 30 June 2011, and the lowest net asset value since 2005-06 (see table 7 in datacube).
Most VC&LSPE investment vehicles were either trusts (funds) or corporations. Of the 239 VC&LSPE investment vehicles operating in 2011-12, 64 were companies, 13 of which were listed with the Australian Stock Exchange.
As at 30 June 2012, 87 of the 239 VC&LSPE investment vehicles were participating in a government program, the same number of participants as in 2011. Of the 87 participating VC&LSPE investment vehicles, 45 were with the Federal government's Pooled Development Fund (PDF) program, a drop of 3 participants.
The value of total assets held by VC&LSPE investment vehicles was widely dispersed, from 122 VC&LSPE investment vehicles having less than $10m in assets, to 28 with more than $80 in total assets.
The value of new and follow-on investments by VC&LSPE investment vehicles fell $287m (24%) in 2011-12 to $927m.
Most return on investment to investees is through exits from investments. The value of exits through trade sales, IPOs and buybacks was $1,696m in 2011-12, compared with exits of $1,427m in 2010-11.
VC& LSPE investment vehicles had total expenditure of $509m during 2011-12, of which the largest component was management fees ($198m, compared to $250m during 2010-12). Total income fell to $459m, driven by a fall in interest receipts ($167m in 2011-12 compared to $220m in 2010-11) and other inflows ($143m in 2011-12 compared to $213m in 2010-11).
VC&LSPE investment vehicles used various valuation methods (refer to paragraph 14 of the Explanatory Notes). The AVCAL method was most frequently used, with 159 VC&LSPE investment vehicles using this method in 2011-12, followed by book value/cost valuation (32), directors valuation (31) and independent valuation methods (17).
When interpreting these data please see the cautionary note in paragraph 19 of the Explanatory Notes.
At the beginning of the 2011-12 financial year there was $8,700m invested in 880 VC&LSPE investee companies. During the 2011-12 financial year a further $677m was invested in new VC&LSPE investee companies, and an additional $250m of follow-on investment was made in existing VC&LSPE investee companies. Net of revaluations and exits this resulted in an investment as at 30 June 2012 of $7,066m in 792 VC&LSPE investee companies.
In 2011-12, there were 94 new VC&LSPE investee companies valued at $677m compared to 97 new VC&LSPE investee companies valued at $928m in 2010-11. There were 176 follow-on investments made to VC&LSPE investee companies in 2011-12, valued at $250m, compared to 172 follow-on investments worth $286m in 2010-11.
Of the 94 new VC&LSPE investee companies in 2011-12, 67 were VC investee companies worth $208m compared to 65 new VC investee companies valued at $71m in 2010-11. The 27 new LSPE investee companies in 2011-12 were worth $469m, while the 32 new LSPE investee companies in 2010-11 were valued at $857m.
When splitting new and follow-on investments by the VC and LSPE stage, the number of new and follow-on VC investments made to VC investee companies in 2011-12 were 202 (compared to 188 in 2010-11), and valued at $331m ($259m in 2010-11). There were 68 new and follow-on LSPE investments made to LSPE investee companies, 13 less than in 2010-11, while the value of these LSPE investments were $596m compared to $955m in 2010-11.
In 2011-12, there were 135 VC follow-on investments made to VC investee companies worth $123m compared to 123 follow-on VC investments made to VC investee companies valued at $188m in 2010-11. The 41 follow-on LSPE investments made to LSPE investee companies in 2011-12 were worth $127m, while 49 follow-on LSPE investments made to LSPE investee companies in 2010-11 were worth $98m, a 30% difference in the value of follow-on LSPE investments over the two years .
The largest concentration of deals held by VC&LSPE vehicles as at 30 June 2012 was with VC&LSPE investee companies established for over 10 years (37%). Investee companies in the 1 to 5 year category accounted for 32% of deals at the end of 2011-12.
In terms of the current stage of investment, total investments in the late expansion stage attracted the largest share, with $3,422m or 48% of total value as at 30 June 2012.
In 2011-12 as well as 2010-11, the large majority of deals (78%) attracted less than $10m worth of investment from any one vehicle.
Most investment was in VC&LSPE investee companies with head offices in New South Wales and Victoria. The current value of VC&LSPE investee companies with head offices in New South Wales fell $1,038m to $2,951m compared to 2010-11, Victoria also fell $381m to $1,333m. The current value of investments by Australian VC&LSPE investment vehicles in offshore VC&LSPE investee companies fell $212m to $1,198m, accounting for 17% of total investment.
VC&LSPE investment vehicles invested in a wide range of industries. Of the total value of $7,066m invested in 2011-12, Finance and Property was the predominant industry of investment, with investments as at 30 June 2012 of $1,582m (22% of total investment) with a $511m drop in the level of investment. The Health and Other Services industry with investments of $1,296m (18% of total investment) and Manufacturing and Utilities industries with investments of $1,149m (16% of total investment) ranked the second and third most predominant industries of investment respectively. The Manufacturing and Utilities industries had the greatest fall in dollar terms of $673m (37%), from the level of investment in 2010-11. The Finance and Property fell $511m (24%) and Trade and Accommodation industries fell $370m (25%). Two industry categories reported increases in their value of VC&LSPE investee companies, with Transport and Communication industry investment values rising $76m (9%) and the Construction industry rising $27m (10%).
When analysed by activity, as defined by the Standard and Poors Activity Classification, the Retail, Services and Real estate activities attracted the largest share of investment, with $2,542m or 36% of total investment as at 30 June 2012. The Manufacturing and Transport activities with $2,335m (33%) also maintained a large share of the total investments as at 30 June 2012.
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