Australian Government opens new venture capital opportunity
The Federal Government has officially opened its new venture capital program for fund registrations.
The Early Stage Venture Capital Limited Partnerships program aims to assist and motivate early-stage investment in innovative companies and industries around Australia.
The drawcard for investors: any dividends and capital gains earned from venture capital funds put towards a registered business or fund will be tax free.
No doubt the program has been created to supplement the loss of the Commercial Ready and Commercial Ready Plus programs, which were withdrawn to the dismay of many Australian organisations earlier this year. (See pages 26-29)To qualify for registrations the funds still need to meet several key criteria, including a strict business plan or model, the management expertise and have a proven ability to raise capital.
Application forms and further information can be accessed from www.ausindustry.gov.au, phoning the Venture Capital Inquiry Line on (02) 6213 6609 or by emailing venturecapital@innovation.gov.au
PricewaterhouseCoopers’ 2008 private Business Barometer: Positivity remains in flailing market
PricewaterhouseCoopers has released the results from its third Private Business Barometer, which interviews 750 private companies to gauge the health of Australian private businesses with turnover between $10m and $100m per annum.
The results proved a little surprising given current economic conditions. At a time when Australia faces its highest inflation rate in 15 years and there have been 12 interest rate rises since 2002, private business outlooks remain relatively positive.
Given the overall pressures on the Australian market, including the US-driven credit crunch, businesses continued to report strong profits, with an average increase across the board at 13.1 percent over the year to February 2008. Overall sales growth also remained healthy at an average of 14.4 percent in the past year.
However, perhaps the most remarkable results were the notable differences found between the south-eastern states and Queensland and Western Australia. Both Queensland and Western Australia saw profit and sales growths above 22 percent, more than doubling those seen in NSW and Victoria.
Nationally, nearly nine out of ten businesses met or exceeded their growth targets from the previous financial year. Geographically, nearly 100 percent of Western Australian businesses and 89 percent of Queensland businesses exceeded set revenue targets. Conversely, only 9.9 percent and 12.2 percent respectively of businesses in NSW and Victoria exceeded set revenue targets.
The report also found that businesses appear cautious about their short-term earnings potential but are more confident in the medium to long-term prospects, with business planning proving critical to those companies that believe they shall achieve long-term prosperity. It also appears that the credit crunch has taken its toll on businesses, with 32.9 percent saying the cost of borrowing has significantly increased. A further 32.2 percent said the credit crunch impelled them to make a more conservative near-term forecast, while 13.3 percent on of businesses have put all capital projects on hold.
The barometer also revealed that a sizeable portion of the total businesses surveyed were planning to venture into overseas markets. Of these organisations, over 40 percent identified New Zealand as their primary target.
In terms of business growth strategies over the following three-year period, the research found that most organisations believe organic growth, rather than growth through acquisition or new product markets, is most desirable.
The cautious approach businesses across-the-board are taking has also impacted on potential hiring. The survey found just over one-third have intentions of firing in the near future. This figure is significantly over the 50 percent that intended to hire as part of their strategy last year. Businesses also stated lack of qualified talent and increased wages as the main reasons why they are being forced to slow down recruitment.
While the immediate outlook for private businesses does not appear particularly encouraging, the survey proves businesses in Australia feel confident in their long-term security.
To download and see the full results of the PwC business barometer visit www.pwc.com/au
Adelaide biotech company lands big deal
Adelaide-based biotech Bionomics (ASX: BNO) has signed a significant development and licensing agreement with Merck Serono, a German pharmaceutical manufacturer, which will see new treatments for multiple sclerosis (and other autoimmune conditions) developed using Bionomics compounds. The agreement may be worth up to US$47 million for Bionomics and also sees the company eligible to received undisclosed royalties on the net sales of licensed products.
Under the terms of the agreement, Bionomics will also receive an upfront payment of US$2 million for continued research funding, and Merck Serono will also pay clinical development costs.
Bionomics’ proprietary Kv1.3 compounds inhibit the production of cells that cause nerve damage in patients suffering from MS and related nerve disorders. The company recently announced that it will benefit from a grant of $37.69 million from the Australian government to fund a major new biotechnology initiative, the CRC for Cancer Therapeutics. Bionomics is the sole Australian drug discovery partner in a consortium of leading research organisations that represents a new approach to the discovery and development of new drugs for the treatment of cancer.
Past financial year dismal for IPOs
New research released by Deloitte has revealed that the average returns from initial public offerings (IPOs) have fallen nearly 97 percent from the 2006/2007 financial year.
IPOs, on average, made a loss of three percent this year compared to an average gain of 91 percent last year.
As a result of these poor performances there has also been a sharp decline in the number of IPOs from last financial year, 75 percent of which happened in the first half of the year.
While these results appear breathtaking, Steve Woosnam, Deloitte Corporate Finance partner, said that actual across-the-board results would have been worse had they not been propped up by resource IPOs, which enjoyed an overall share price gain of 18 percent.
“The story of the past year is more accurately reflected by the average loss of 29 percent for investors in the 10 biggest IPOs of the past year. These floats accounted for almost 60 percent of all funds raised in 2007/2008 and are more representative of the experience for most IPO investors,” Woosnam said.
In Brief
Employers need to review salary packagesAfter changes to the fringe benefits tax legislation and amendment to income tax brackets, Deloitte has advised that employers should check to see how the changes will affect the current salary packages they are providing. Changes mean that salary packages including laptops, other electronic devices and meal cards may not be attractive to employees because more stringent legislation relating to how these items must be used may affect their viability.
New Adelaide technology receives venture funding
Playford Capital and Cleantech Ventures have made a $750,000 Series A investment in Adelaide-based Ember Technologies. The funding will assist Ember Technologies develop technology that can selectively turn off electrical devices. Expect an Australian market launch in 2009.
Superannuation funds look to hedge their bets
Australian superannuation funds intend to increase their investment allocations in hedge funds by $1 billion in the next 2-5 years according to research conducted by University of NSW Business School, commissioned by the Australian Chapter of the Alternative Investment Management Association (AIMA). Research shows seven in 10 investment funds currently invest in hedge funds but this is expected to rise to nine in 10 in the
coming years.I
Innovation Capital spend big
Australian venture capital firm Innovation Capital has announced that it will invest $2.5m in Medistream Pty Ltd. Brisbane-based Mediastream designs, develops and commercialises drug delivery technologies and devices such as the Sport-Haler, an asthma medication delivery system. The investment money will be used to accelerate the distribution of the Sports-Haler in Australia and overseas, and facilitate the development of further devices.
Australian venture capital firm Innovation Capital has announced that it will invest $2.5m in Medistream Pty Ltd. Brisbane-based Mediastream designs, develops and commercialises drug delivery technologies and devices such as the Sport-Haler, an asthma medication delivery system. The investment money will be used to accelerate the distribution of the Sports-Haler in Australia and overseas, and facilitate the development of further devices.
BEC receives big boost
The federal government has announced it will provide the Business Enterprise Centres Australia with $42 million funding over four years. The funds will be used by BEC to help fund one-stop business advisory centres across Australia. The funding is a result of the Labour Government decision to promote and support more than 30 advisory centres across the nation.
The federal government has announced it will provide the Business Enterprise Centres Australia with $42 million funding over four years. The funds will be used by BEC to help fund one-stop business advisory centres across Australia. The funding is a result of the Labour Government decision to promote and support more than 30 advisory centres across the nation.itX acquires Birell Marketing
itX Group, one of Australia’s leading IT distribution companies, has bought Birell Marketing for $6 million. Birell Marketing are a distributes printers and media for personal identification and security cards and medical and photographic imaging. F
Fairfax buys the weather
The Weather Company, which owns and operates several weather-related media systems, including weatherzone.com.au, has sold 75 percent of its shares to Fairfax Digital. Mark Hardy, founder and current Managing Director of The Weather Company, holds the remaining share and will remain on at the company.
