Business booms in private equity world
By Craig Phillips
FORTY per cent of private equity fund managers have identified high exit price expectations by vendors as the biggest constraint on the industry over the past six months.
Buoyant share markets and strong activity in the mergers and acquisition sector have led many vendors with hopes of selling to private equity managers to raise their price expectations as similar companies are snapped up or list at high multiples, according to the latest Deloitte Private Equity Confidence Survey.
The bi-annual survey suggested the situation is unlikely to improve in the near term for Australian and New Zealand venture capitalists, with many expecting entry multiples to rise over coming months.
However, despite the rise in the price of potential investee companies, 67 per cent of the 140 venture capitalists polled expected to be net buyers for the six months to June this year.
“It would seem that Australian and New Zealand venture capitalists are prepared to wear these expected higher prices in order to invest in quality deals,” Deloitte said in the report.
The survey claimed one of the key issues faced by “cashed-up” venture capitalists was where to find good quality businesses, with 73 per cent of venture capitalists expecting the main area for such deals to come from family and privately run firms.
Despite the concern surrounding entry costs, most venture capitalists were confident about their existing portfolios.
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AUSIEX has announced it will acquire FIIG, a specialist fixed income provider with $4.5 billion in funds under advice.
Platinum Asset Management has announced it is in discussions with a global alternatives fund manager regarding a possible merger to create an $18 billion firm.
Frontier Advisors has bolstered its Japanese footprint through a partnership with the $350 billion asset management arm of Nippon Life Insurance Company.
JP Morgan Asset Management has appointed an ETF specialist from Vanguard as it seeks to expand its ETF range.
