5678.0 - Venture Capital and Later Stage Private Equity, Australia, 2010-11  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 09/02/2012   
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ANALYSIS OF RESULTS


INVESTORS

As at 30 June 2011, $15.9b was committed to direct VC&LSPE investment vehicles, $5.1b of which was committed via fund of funds investment vehicles. As at 30 June 2011, $3.6b of commitments to direct VC&LSPE investment vehicles were unused, $1.3b of which was committed via fund of funds investment vehicles (see table 1).

The following graph presents drawdown investment for VC&LSPE investors by type of investor. The largest source of funds in terms of drawdowns for VC&LSPE vehicles was provided by domestic pension funds, with 61% of total drawdowns (up slightly from 60% for 2009-10).

DRAWDOWN FROM INVESTORS BY INVESTOR TYPE, Percentage of total investment in VC&LSPE vehicles - 2010-11
Graph: DRAWDOWN FROM INVESTORS BY INVESTOR TYPE, Percentage of total investment in VC&LSPE vehicles—2010–11



VC&LSPE MANAGERS AND INVESTMENT VEHICLES

The survey identified 156 active VC&LSPE managers who were managing 257 VC&LSPE investment vehicles.

VC&LSPE managers received income in the form of management fees ($252m) (see table 20). In 2010-11, fund managers spent on average 4.6 days a month per investee company. This compares with 4.0 days in 2009-10 and 3.5 days in 2008-09 (see table 18).

VC&LSPE investment vehicles had net assets of $10.3b as at 30 June 2011 compared with $10.2b as at 30 June 2010 and $9.4b as at 30 June 2009 (see table 8).

Most VC&LSPE investment vehicles were either trusts (funds) or corporations. Of the 257 vehicles operating in 2010-11, 70 were companies, 13 of which were listed with the Australian Stock Exchange (see table 9).

As at 30 June 2011, 89 of the 257 VC&LSPE investment vehicles were participating in a government program, a 11% fall on the number of participants in 2010. Of the 89 participating investment vehicles, 50 were with the Federal government's Pooled Development Fund (PDF) program, a 17% fall in the number of participants (see table 10).

The value of total assets held by VC&LSPE investment vehicles was widely dispersed, from 133 investment vehicles having less than $10m in assets, to 39 with more than $80m in total assets (see following graph).

NUMBER OF INVESTMENT VEHICLES, By value of assets held
Graph: NUMBER OF INVESTMENT VEHICLES, By value of assets held


Table 2 shows the financial flows between VC&LSPE investment vehicles and investee companies over the survey period. New and follow-on investments by VC&LSPE investment vehicles fell $167m (13%) in 2010-11 to $1,077m.

Most return on investment to investees is through exits from investments. The value of exits through trade sales, IPOs and buybacks was $1,433m in 2010-11, compared with exits of $686m in 2009-10.

ADDITIONS AND EXITS TO INVESTMENTS IN INVESTEE COMPANIES
Graph: ADDITIONS AND EXITS TO INVESTMENTS IN INVESTEE COMPANIES


Investment vehicles had total expenditure of $458m during 2010-11, of which the largest component was management fees ($252m, compared to $257m during 2009-10). Total income rose to $577m, driven mainly by rises in interest receipts ($220m in 2010-11 compared to $198m in 2009-10), other inflows ($217m in 2010-11 compared to $117m in 2009-10) and dividends received ($141m in 2010-11 compared to $109m in 2009-10) (see table 20).

EXPENDITURE AND INCOME OF INVESTMENT VEHICLES
Graph: EXPENDITURE AND INCOME OF INVESTMENT VEHICLES


VC&LSPE funds used various valuation methods (refer to paragraph 14 of the Explanatory Notes). The AVCAL method was most frequently used, with 162 vehicles using this method in 2010-11, followed by book value/cost valuation (37), directors' valuation (34) and independent valuation methods (24).

VALUATION METHODS USED, By investment vehicles
Graph: VALUATION METHODS USED, By investment vehicles



INVESTEE COMPANIES

At the beginning of the 2010-11 financial year there was $8,912m invested in 984 investee companies (deals). During the 2010-11 financial year a further $791m was invested in new vehicles and projects, and an additional $286m of follow on investment was made in existing vehicles and projects. Net of revaluations and exits this resulted in an investment as at 30 June 2011 of $8,694m in 875 investee companies. See table 2 for more details.

The following graph indicates that as at 30 June 2011, the largest concentration of deals held by VC&LSPE vehicles was with investee companies established for over 10 years (33%). Investee companies in the five to 10 year category accounted for 32% of deals at the end of 2010-11.

NUMBER OF DEALS, By age of investee company
Graph: NUMBER OF DEALS, By age of investee company


In terms of the current stage of investment, total investments in the late expansion stage attracted the largest share, with $3,750m or 43% of total value as at 30 June 2011 (see table 14).

See paragraph 12 of the Explanatory Notes for a definition of the VC&LSPE stages referred to in the following graph.

VALUE OF INVESTMENT, By investee stage - 2010-11
Graph: VALUE OF INVESTMENT, By investee stage—2010–11


The following graph 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.

VALUE OF INVESTMENT, By number of investees
Graph: VALUE OF INVESTMENT, By number of investees


Most of the value of VC&LSPE investment was in investee companies with head offices in New South Wales and Victoria (46% and 20% respectively as at 30 June 2011). The current value of investee companies with head offices in New South Wales fell $19m to $3,997m compared to 2009-10, Victoria also fell $66m to $1,713m. The current value of investments by Australian vehicles in offshore investee companies fell $86m to $1,405m, accounting for 16% of total investment (see table 11).

PERCENTAGE OF INVESTMENT VALUE, By location of investee
Graph: PERCENTAGE OF INVESTMENT VALUE, By location of investee


VC&LSPE vehicles invested in a wide range of industries. Of the total value of $8,694m invested in 2010-11, Finance and Property was the predominant industry of investment, with investments as at 30 June 2011 of $2,091m (24% of total investment) with a $159m rise in the level of investment. The Manufacturing and Utilities industries with investments of $1,813m (21% of total investment) and the Trade and Accommodation industry with investments $1,488m (17% of total investment) ranked the second and third most predominant industries of investment respectively. The Manufacturing and Utilities industries fell $202m from the level of investment in 2009-10. The Health and Other Services industries fell $192m, Trade and Accommodation industries fell $104m, and the Agriculture and Mining industries fell $16m, (see table 12).

PERCENTAGE OF TOTAL INVESTMENT, By industry of investee
Graph: PERCENTAGE OF TOTAL INVESTMENT, By industry of investee


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 $3,008m or 35% of total investment as at 30 June 2011. The Manufacturing and Transport activities with $2,472m (28%) also attracted a large share of the total investments as at 30 June 2011 (see table 13).

PERCENTAGE OF VALUE OF INVESTMENT, By activity of investee
Graph: PERCENTAGE OF VALUE OF INVESTMENT, By activity of investee