M.H Carnegie Private Equity invests in Assetic – advised by M&A Partners – Australian Financial Review

Tuesday, 15th January 2013

Mark Carnegie’s venture capital funds have spent more than $10 million snapping up a 55 per cent stake in Assetic, a software provider that records, tracks, and predicts future infrastructure spending by government.

Mr Carnegie built his career in corporate advisory and private equity including founding independent firm Carnegie Wylie with John Wylie in 1999. In 2010, he turned to venture capital.

His Carnegie Venture Capital Fund and Carnegie Private Opportunities Fund have made the latest investment.

Assetic’s strategic asset management software, which counts local councils of Latrobe City, Victoria, Glenorchy City, Tasmania and Gosford, NSW as clients, will be expanded into private sector markets and other utility sectors like water and electricity.

Australia faces a deficit of funding for its ageing infrastructure assets from roads to pipes to sewers over the next 20 years.

Assetic allows owners to model and predict the impact this will have on future replacement costs and declining service levels.

Mr Carnegie told The Australian Financial Review that he easily expects to grow the business to five times its current size, but there is scope to grow it up to 10 times.

We see there is a five-times expansion without doing anything more than putting some real muscle behind who they are selling to at the moment, he said.

I think this can be done in four years. They always say you want three to five times your money in three to five years in venture capital. My guess is this business will be five times as big in four years.

We also think there are international expansion opportunities, especially in the UK, because we see a series of trends in the UK that look a lot of like Australia.

Assetic, advised by M&A Partners, was started nearly a decade ago by Ashay Prabhu and Joel Brakey, who own the balance of the company. Mr Carnegie said Assetic tuns several million sales a year and is growing at 40 per cent per annum.

We are trying to sup that up to 60 per cent growth, he said.

He believed the software could be valuable in private sector Australia.

There is a whole lot of infrastructure money available among the superannuation funds who are looking for ways to earn a return so as long as they understand the assets … and we think these guys are at mission control… it gives people better understanding of infrastructure.

The macro bet here is there is somewhere between $10 and $50 trillion of repairs and maintenance on infrastructure required today in the world, and these guys have been able to get the dominate position in terms of providing information about this to local councils. We think we have got something really exciting.

The investment banker has gained headlines lately along with his partner in Gutenberg Investments Trust, ad man John Singleton, after taking a small stake in Fairfax Media, and pushing for a strategy overhaul. They agreed to consult with the company’s largest shareholder Gina Rinehart.

Mr Carnegie declined comment on whether they have interest in increasing their stake in Fairfax.

However, Mr Carnegie said he will meet with Perpetual Investments and Washington H Soul Pattinson upon his return to Australia. He has partnered with Perpetual to unlock billions of dollars in value it believes is tied up in the cross-ownership structure with Soul Patts.

There is a mature conversation going on between Perpetual and [Soul Patts] at the moment and we hope something will progress… it should, he said.

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Carnegie Takes Control of Software Provider Assetic – The Wall Street Journal

By Caroline Henshaw
Australian private equity firm M.H. Carnegie & Co. sees opportunities building in infrastructure, prompting it to acquire a majority stake in software provider Assetic Pty Ltd.

Carnegie paid 10 million Australian dollars (US$10.6 million) for a 55% stake in the Melbourne-based technology business, whose software is used by local governments to track and predict how billions of dollars should be spent on Australia���s infrastructure such as roads, housing and sewers in the coming years.

Australian infrastructure is one of the hottest sectors for investors right now, as the appeal of industries like coal mining wanes due to weak commodity prices, and other areas of the economy rein in their spending��Citigroup��C��-0.28%estimates Australia will need to invest A$770 billion on improving its infrastructure in the decade through 2018.

Assetic���s ���outstanding growth rates��� and ���position as the leading supplier of strategic asset management software to local government in Australia were key attractions for investors,��� said Antony Lynch, director of M&A Partners, which advised Assetic���s owners on the equity selldown.

The investment was made through Carnegie Venture Capital Fund and the Carnegie Private Opportunities Fund, M&A Partners and Assetic said in a statement.

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Symex turns a new leaf as Pental – Australian Financial Review

Tuesday, 8th January 2013

PUBLISHED: 07 JAN 2013 19:12:15 | UPDATED: 08 JAN 2013 00:32:52

Troubled Symex Holdings has been given a second chance under a fresh name and a new capital structure.
Sales and marketing group Sales Link has emerged as a cornerstone investor in the consumer products company, while lender ANZ Banking Group has written off $10 million in bad debt.

Symex, now called Pental, owns well-known supermarket brands including White King bleach which it bought for nearly $50 million in 2011. It is the largest manufacturer of soap in Australia, and also owns Sunlight and Huggie fabric softener. It also owns Jiffy firelighters.

Up until six months ago Symex was primarily a chemicals manufacturer, suspend from trade after failing to repay a loan to ANZ. Only one of three business units was profitable. Its Oleo chemical business, which made plastics and personal care items was not viable, hurt by the rising Australian dollar.

The company posted a net loss of $60.67 million in fiscal 2012 with total debt ballooning to more than $60 million over four times its market capitalisation. Adviser M&A Partners led a restructure, including a one for seven renounceable rights issue, which raised $19.3 million at 1.5 a share. There was also a short dated loyalty option a one for four issue priced at 2 each.

Existing shareholders Allan Grey and Victorian auto dealership investor Alan Johnstone tipped in additional funds, ending up with 17 per cent and 19 per cent stakes respectively.
Sales Link emerged with a 17 per cent stake after pumping in $3.7 million. It also entered sales agreements to provide retail marketing services to Pental.
New Pental chief executive Alan Fisher has sold non-core assets, closed under performing businesses and reached a deed of forgiveness with ANZ bank in recent months. Last year the company sold a large parcel of land behind the Port Melbourne football ground for $25 million with funds used to repay debt.

When successful business are overly leveraged with costly legacy issues it’s in the best interests of the market and shareholders to address the problems head on and vigorously pursue restructuring strategies despite the market climate, Mr Fisher said.

Earnings before interest, tax, and amortisation are expected to reach $10 million this financial year. By June 30 debt is tipped to be reduced to about $25 million from $65 million at its peak.

The deal would not have moved ahead without ANZ forgiving about $10 million in debt.

Writing off $10 million, it protected the rest of the debt, and if they didn’t do that they may have lost a lot more, said one source.

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