Colonial expands into private equity market

Colonial First State Australia has expanded in to the domestic private equity sector with the roll out of a Diversified Private Equity Fund.

The new retail fund is part of Colonial's plan to meet a demand for more innovative private equity funds to suit retail investors, rather than originally only being available to institutional investors.

Colonial First State Australia, Chief Executive Officer, Chris Cuffe says the local private equity sector expanded significantly last year to $8.5 billion.

He says results from an Australian Venture Capital Journal/PricewaterhouseCoopers survey found that in places like the US and Europe, about 5 per cent of available funds goes to private equity.

Cuffe says the fund will have priority access to dealflow opportunities through the Commonwealth Bank of Australia, which has no existing private equity operations itself.

He says Colonial First State Investments has shown its support for the new fund by arranging an initial investment of $40 million from internal sources.

The fund offers investors access to a portfolio of quality unlisted companies that will aim to generate returns greater than traditional listed investments over a 10-year period. Colonial is looking to raise $150 - 200 million through the venture.

The fund will be managed by a team of eight investment professionals headed by Steve Baldwin. The investment team will also have the benefit of input from a six-member Investment Advisory Council, chaired by Mr Bill Beerworth.

Private equity gives investors the potential for higher returns than traditional share market investments. The risks are also higher and the fund will draw on Colonial First State's disciplined approach to risk management.

Colonial First State Private Equity Limited (formerly Hambro-Grantham Limited) has invested in 70 businesses and exited from over 50 of these, as at March 31, 2001.

The offer opens on May 1, 2001 and will close on July 31, 2001.