Record number of PE realisations; and most PE-backed IPOs; highest distributions to LPs
The Australian Private Equity market is in excellent shape with many records posted in the past financial year according to Dr Kar Mei Tang, Head of Research at AVCAL, the Australian Private Equity and Venture Capital Association, who was speaking at the AVCJ Australia & New Zealand Forum in Sydney today.
“Its been a big year for realisations with a record 57 PE- backed companies with full or partial exits in FY14.
“Equally, FY14 was a big year for IPO related activity with 12 PE-backed IPOs, whilst there were 17 PE-backed IPOs in calendar 2014.”
“There were 15 Venture Capital exits during the year raising some $170million in proceeds. These included Brandon Capital’s exit from Fibrotech Therapeutics, which is developing a new class of drugs to treat fibrosis, to global pharmaceutical company Shire plc. Another notable VC exit was from digital rock technology business Lithicon, which was acquired by FEI from ANU Connect Ventures for $76 million. This sale is the most significant commercial spin-off for the ANU in 10 years with the university achieving a five-fold return in its original investment.
“Although the number of VC exits declined, the exits resulted in attractive realisations with total proceeds up by 3.5 times on the previous year.
“FY14 was also a record year for LP distributions- in the 12 months to September 2014 $4.4 billion was paid back to LPs.
“In terms of benchmark performance the industry has continued to outperform the listed markets by a significant margin. PE and VC annual returns were around 28% and 14% respectively versus 5.7% for the ASX 300 in the 12 months to September 2014.
“Some other pleasing figures include post IPO performance: over the last two years, average returns for PE-backed IPOs since listing have outperformed non-PE-backed IPOs by around 3%.
“In particular PE-backed IPOs represented 3 of the top 5 performers, namely Veda, Mantra and OzForex.
“The outlook for the sector is positive in Australia.
“AVCAL estimates there are around 20,000 companies in Australia with revenues of between $190 and $200million, of which only 1% are being tapped at the moment.
“There is great room for growth. Only 6% to 9% of M&A activity in Australia is PE related verses 10% to 20% or the US and UK markets,” Dr Kar Mei Tang said.
About Asian Venture Capital Journal:
Asian Venture Capital Journal (AVCJ) is a renowned magazine and online journal covering the private equity industry in Asia. It has been holding events in the region for more than 20 years, including the Hong Kong Forum, the largest gathering of institutional investors in Asia. The firm has kept pace with the development of the industry over the years by offering country-specific events across the Asia Pacific region.
For more information, please visit www.avcjausnz.com.
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