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ACTU Brett Himbury, CEO, IFM

ACTU Brett Himbury, CEO, IFM. June 2011. What is Private Equity?. Private equity is a model of ownership for investors based on specific investment strategies and contractual agreements between fund managers and investors Usually not quoted or quoted companies with the purpose of delisting

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ACTU Brett Himbury, CEO, IFM

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  1. ACTUBrett Himbury, CEO, IFM June 2011

  2. What is Private Equity? • Private equity is a model of ownership for investors based on specific investment strategies and contractual agreements between fund managers and investors • Usually not quoted or quoted companies with the purpose of delisting • Stage of development varies from very young companies to more mature businesses. Private equity fund managers will create a portfolio by making a number of investments • Usually made with one of two objectives in mind: • Develop innovative portfolio companies with high growth potential; or • Increase the value of portfolio companies, through growth strategies actively monitoring the decisions taken by the management and establishing clear lines of responsibility and corresponding incentives • Investments are long term • “True Private Equity” IFM’s definition • SME’s of below $500 million Enterprise Value • Businesses with the potential to grow and build value • Businesses in need of transformation • Long term, building better companies, delivering returns well in excess of listed market returns

  3. 3.0 2.5 2.7x 2.0 2.4x 1.5 1.0 1.3x 0.5 0.0 Large Buyout Small Buyout Venture Capital Private Equity Performance US Buyout Net Performance relative to Public Market Benchmark As at December 2010 for vintage years 1984 – 2005 Average net performance is 1.20x the listed benchmark Australian Buyouts have delivered >2x Multiple of Capital return, and >25% IRR Australian Private Equity Performance by Realised Investment (IFM Aggregate Performance 1998 to 2010, Gross Multiple Return on Capital Invested) $100m EV or greater $100m EV or less

  4. Impact of Private Equity Growth in employment under private equity ownership vs comparable benchmarks • Australian Private Equity • Companies are major • employers – eg. • Rebel Sports • JB Hi-FI • Hoyts • Bras & Things • Kathmandu • etc Sources: Shapiro and Pham (2008), BVCA/IE Consulting (2007), AIFI/PwC (2008), ASCRI (2009), AVCAL analysis

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