Trio of launches shows that private equity is heating up

The private equity market appear to be hotting up with the launch of the third retail offering in the sector in the last six months.

The private equity market appear to be hotting up with the launch of the third retail offering in the sector in the last six months.

Biz Vision, a group made up of the management team at venture capital veterans Continental Venture Capital (CVC), has launched a $40 million private equity fund aimed at the retail market.

The launch follows the huge demand for other recent private equity offerings by Macquarie and Advent. Macquarie’s recent MIT III fund set out to attract $50 mil-lion from retail investors and ended up with $90 million, predominantly through advisers.

Biz Vision investment manager Sandy Beard says the private equity market in Australia will follow the boom in such funds in the US and UK.

Venture capital funds raised about $A36 billion in the US last year and about $A14 billion in the UK. In Australia, about $1.7 billion was raised last year, however Biz Vision has forecast that figure will come closer to $2.5 billion this year.

Biz Vision’s fund will invest anything from $500,000 to $5 million in established companies which are at a high growth stage in their development. While it is a general private equity fund, it intends to focus on companies operating in the bio-tech, IT, medical, transport and education industries.

However, Beard emphasises company selection is based on the quality of the com-pany’s management and its sustainable competitive advantage.

Unlike the other two recent offerings, Biz Vision’s fund is structured as a pooled development fund (PDF) which under the PDF Act of 1992 provides for significant tax concessions.

Beard says the PDF structure has the inherent advantage of no capital gains tax li-ability to shareholders in the PDF. Additionally, all dividends paid by the PDF, whether franked or unfranked, are exempt from tax to the receiving shareholders.

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