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.

Click here for the AFR page