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).

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).

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.

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).

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).

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.

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.

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.

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).

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).

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).