Last time Anthill talked with Domenic Carosa, the former CEO of Destra Corporation, he spoke philosophically about losing his founding stake in the public company, as one of many casualties of the Opes Prime collapse.

Not one to rest on his laurels (or get bogged down in ‘minor’ set-backs), the serial entrepreneur explained in the linked video how he would be taking the lessons he learned starting and growing a public company from scratch and applying these skills to a portfolio of internet startups by launching his own venture capital fund.

This week, Carosa’s Future Capital Development Fund (FCDFL), Australia’s only internet-focused Pooled Development Fund, announced its plans to raise a new round of capital in the lead up to an IPO. It’s current portfolio consists of approximately 15 companies, including MP3.com.au, which he bought back from Destra last year.

So far, Carosa has already raised more than $2 million of a target $3 million from existing investors, including former RealEstate.com.au CEO Simon Baker and Flexigroup founder and rich list member Andrew Abercrombie. Carosa then plans to list the fund on the ASX in late 2010 or earlier, in a float that he expects will raise $10 to $20 million.

Why float?

Talking very briefly to Carosa earlier today, I asked, “Why list and why now?”

He replied, with his trademark charismatic guile, “Timing is everything,” before emailing a handful of powerpoint slides.

It’s clear that the Future Capital Development Fund and its backers have an end goal in mind.

And I believe that goal is a sale.

This might seem a strange assumption to make, particularly after explaining only sentences ago that the fund plans to go public, pulling an additional $10 million into its coffers through the process.

Why now?

There is that old saying, a rising tide lifts all boats. If the market is gaining momentum, it pays to become part of that tide. The timing will soon be ripe to raise those additional funds through an IPO.

However, as Carosa would only be too happy to point out, many larger companies are also likely to want to start taking advantage of this change in shareholder sentiment and the most obvious (and generally preferred) way to do that is to start gobbling up smaller companies.

Not only does an acquisition create a good story to tell, it also can do wonders to a company’s balance sheet, piping in additional profitablity if the acquisition is a profitable business.

But here’s where it gets really interesting.

Price Earnings Multiples for Listed Companies

The average Price Earnings (PE) Ratio for a publicly listed company on the Australian Stock Exchange in FY09 was 19.5. For those not completely familiar with stock market lingo, this simply means that shareholders believe that the company is worth almost 20 times the amount of money it earns.

In the private sector, these sorts of valuations are almost unheard of. If I wanted to sell a coffee shop, for example, the buyer would look at my EBIT (my annual profit, to simplify things) and then multiply that by, maybe, three… if I’m lucky!

As such, a small private company might be worth three times its earnings. A large listed company is worth 20 times its earnings. This means that any additional profitability will increase the value of a listed company 20 times the additional profit. No wonder acquisitions are such as attractive growth strategy for listed entities!

Internet companies attract an even higher valuation. SEEK Ltd (ASX Code: SEK), for example, currently attracts a PE ratio of 34.1. The sector to which it belongs is valued according to an average multiple of 20.4.

By ‘rolling up’ a series of profitable internet-based companies to list on the ASX, the FCDFL could indeed be positioning itself for a very profitable takeover.

And here’s the cherry on top.

The FCDFL is a pooled development fund, a structure that affords significant tax concessions for investors, including tax-free capital gains on the sale of their shares. Should its backers achieve a sale or merger, the proceeds will offer its investors, including those joining the fund in the current round and future rounds, a tax-free capital gain.