Innovation
Issue No. 21 - February/March 2005
Angels of private equity
The Venture Capital Board will host a Private Equity Forum on Thursday, 17 March at the Adelaide Convention Centre, to demystify private equity and explain how local entrepreneurs and business owners can access it to establish or grow their businesses. (For more information visit the VCB website at www.vcbsa.com.au. Registration can be obtained at www.avcal.com.au.)
Dr Roger Sexton leads the VCB, formed by the State Government in December 2003 to help and support the development of a sustainable private equity sector in South Australia.
Private equity is not well understood in the business community, Roger believes.
“Every business has equity - it's the proportion of a company that shareholders own,” he says.
“Likewise all business owners have significant capital involved in their businesses. But it's important to consider the ownership and value of that capital.
“Over the years I have heard many business owners complaining that finance is one of their biggest constraints.
“‘The banks won't lend us the capital we need to expand,’ is a familiar catchcry. However, expansion capital is generally not the role of the banks and business owners need to look at ‘risk capital’ for this purpose. This is where private equity comes in. Private equity can be attractive for family businesses as well as privatising ‘unloved’ divisions of public companies.”
Private equity involves an individual, institution or company risking their capital for a percentage of ownership of a company.
Private equity can be sourced from a number of areas, the most common being formal Private Equity Funds followed by high-net-worth individuals, known in the private equity markets as "business angels" and family and friends.
Private Equity funds are generally funded through one or more institutional superannuation fund...
