There are well over fifty Private Equity funds in Australia alone. Each fund looks to differentiate itself with various investment target sizes, strategy, culture and specialist areas of expertise (such as a particular sector or type of company).
If that isn’t enough choice, there are also Venture Capital funds and a myriad of other financial sponsorship models with differing approaches to risk and reward.
But how can you determine if it’s the right choice for you? In the table below, we illustrate ‘the universe’ of available Private Equity investors in Australia.
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PRIVATE EQUITY INVESTOR TYPE
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INVESTOR DESCRIPTION
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INVESTMENT STYLE
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Venture capital
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Seed or early-stage often seek to sector specialise as investments are ordinarily pre-profitability or even revenue.
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Minority investor, backing a management team and the development of valued Intellectual Property.
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Development capital
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Later stage, growth investors. Includes regional governmental or pseudo-government agency investment.
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Minority investors with certain key minority control rights. Passive investment style.
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Family office
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Investment office of one or more High Net Worth individual(s) and associated family. Focus is on diversification and reinvestment of wealth into a range of asset classes, which frequently includes Private Equity-type investment.
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Both active and passive investors via majority and minority stakes in multiple that are typically held for a longer period than other institutional investors. Often focused on investment in sectors and businesses familiar to the underlying family.
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Sector specialists
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Focus on key growth sectors as core investment hypothesis.
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Use of activist sector experts to drive strategy and target specific acquisition targets.
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Regional specialists
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Regionally originated houses focused on specific geographies and regional industries.
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Local industrial knowledge and connections. Leverage local networks and relationships.
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‘Middle-market’ specialists
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An active core of houses seeking transactions with a broad range of Enterprise Values.
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Focus on deploying target levels of investment capital per deal in attractive businesses. Will require control.
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Buy and build
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A subset of the middle-market, focusing on the acquisition of core ‘platform investments’ upon which additional bolt-on acquisitions will follow.
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Use of industry experts arbitraging combination synergies and knowledge of sectors.
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Operational / transformational specialists
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Seeking to transform suboptimal or underperforming businesses, which will typically be acquired at lower valuations.
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Use of operating partners to deliver transformational change, often including enhancement of management teams.
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International inbound
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Overseas investors seeking acquisitions in Australia.
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Seeking complementary investments or geographic foothold in the Australian business environment.
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