Private equity (PE) and venture capital (VC) fundraisings, investments and divestments have grown over the past year, according to the 2011 Yearbook, an annual report of the primary activities of Australian PE and VC firms for financial year published by the Australian Private Equity and Venture Capital Association (AVCAL).
The amount invested by PE and VC fund managers in Australian companies is the highest in the past three years at AUD3.6 billion dollars, with over 40% invested into one deal (Healthscope). The number of companies acquired in FY2011 at 150 is the lowest in recent years, reflecting greater investment selectivity and an increasing concentration of activity within the industry.
AVCAL CEO Dr Katherine Woodthorpe( (pictured), says: “2011 has seen more funds raised but by fewer fund managers, marking a period of consolidation within the industry. However, there has been an increase in the number of exits and many of them have generated excellent returns. Overall the data is encouraging, demonstrating the strength and stability of the industry in times of wider economic volatility and uncertainty.”
The importance of foreign capital in funding Australian businesses is clearer than ever, with around half of all new commitments to Australian fund managers sourced from overseas. Businesses funded by PE mostly comprise small and medium‐sized enterprises, which make a significant contribution to Australia’s current economic growth story. The innovative, high‐growth companies funded by VC are potential key drivers of our economic competitiveness in the future.
“The trend of declining VC activity has continued at the very time Australia should be building better pipelines to accelerate innovation and commercialise research and development investments by the Australian taxpayer. Australia desperately needs a policy framework to do this so that we have an ongoing process to give our nation a competitive edge in the years to come,” Dr Woodthorpe says.
Ernst & Young Oceania Managing Partner, Private Equity, Bryan Zekulich, says: “We believe the private equity and venture capital industry needs access to accurate and detailed information about the performance of the industry to help explain to stakeholders how important this industry is to Australia’s economy. As AVCAL’s research partner, we are pleased to support the industry, and are delighted to be sponsoring the 2011 Yearbook.”
