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Private Equity Update

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Update on the private equity sector by Archer Capital

Update on the private equity sector by Archer Capital

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    Private Equity Update Private Equity Update Presentation Transcript

    • CFO Network Event: PrivateEquity Update
      8 June 2010
    • Introduction to Archer Capital
      Archer is one of the largest & most successful Private Equity managers in Australia
      • Established in 1997 and is an independent Private Equity firm
      • Currently has A$2 billion of funds under management or advisement, provided primarily by large Australian super funds as well as several international private equity investment funds
      • Substantial in-house operating experience and a strong operational focus
      • Since 1998 Archer Capital has completed 25 investments with a total deal value of $4 billion and on 15 realised deals has generated a gross IRR of over 50%
      Current Investments
    • Archer Capital Fund Mandate
      3
      Archer is focused on buyouts
      Private Equity Spectrum
      Seed / Venture Capital
      Expansion Capital
      Buyouts (LBOs,
      MBOs, MBIs, etc.)
      Archer Focus
    • 4
      Investment Approach
      Archer believes that in order to generate superior returns, Private Equity managers must be owner-operators and not simply geared passive institutional investors
      In embryonic markets, less competition leads to low pricing pressure and a “buy low, sell high” approach can generate superior returns
      As the market matures, deep capital markets price risk more efficiently reducing the returns available from financial structuring alone
      Superior returns in mature markets arise from an ability to increase value during the period of ownership, which requires:
      Identification of value creation opportunities during deal assessment
      An ability to drive operational performance, and hence value creation, during the period of ownership
      Increasing
      Market
      Maturity
    • 1,800
      Private Equity Activity: The last five years
      Over past five years there was a total Private Equity investment of $8.7b into 570 Australian companies. FY09 activity was 27% down on FY07 in terms of amount
      Funds Invested (AUDm)
      No of Companies
      FY09
      FY08
      FY07
      FY06
      FY05
      FY04
      Source: Australian Private Equity & Venture Capital Association Limited, Fiscal Year Ended June 30, 2009
    • 2
      6
      Private Equity Activity: the impact of debt and leverage
      19%
      There is a strong correlation between transaction multiples and the availability and term of acquisition debt.
      Acquisition Multiples Paid by Private Equity
      Use of Leverage in Private Equity Acquisitions
      Debt / EBITDA
      Purchase Price / EBITDA
      2008
      2007
      2006
      2005
      2004
      2003
      2002
      2001
      2000
      2000
      2001
      2002
      2008
      2007
      2006
      2004
      2005
      2003
    • )
      However... reports of Private Equity’s demise have been exaggerated
      Private Equity investment in Australia will continue to be a factor based on the amount of capital that has already been raised. In the past five years the amount of Private Equity monies raised amounted to $18.5b compared to $8.7b invested.
      Funds Raised
      Funds Invested (AUDm)
      FY09
      FY08
      FY07
      FY06
      FY05
      FY04
      Source: Australian Private Equity & Venture Capital Association Limited, Fiscal Year Ended June 30, 2009
    • Private Equity is a different form of company ownership
      At the core of Private Equity is a fundamentally aggressive focus on equity returns and some different operating principles...
      At the core of Private Equity is a fundamentally aggressive focus on equity returns and some different operating principles...
    • 9
      19%
      Questions