Jeremy Samuel, formerly director of private equity at ANZ Capital, has formed a new private equity firm that will target the small to medium enterprise (SME) market.
The new firm, Anacacia Capital, is preparing for a mid year capital raising for its first wholesale fund.
Mr Samuel said Anacacia Capital plans to support management teams seeking to acquire businesses with EBIT generally of less than $10 million a year and to provide expansion capital for these and other businesses in the SME sector.
He said many established private equity firms were now focusing on larger businesses - including public companies – often creating auction situations. Anacacia Capital, however, planned to focus on developing its own exclusive deal flow at the SME end of the market.
“There is real opportunity in this sector; succession is an increasing issue facing Australian businesses and private equity can be a solution,” he said. “Anacacia will invest private equity into companies that are managing ownership change, succession and acquisitions and have first rate management.
“We are responding to a significant under-served part of the market. SMEs - particularly family owned businesses - are crying out for ways to manage ownership change, succession and acquisitions. At the same time, sophisticated investors are seeking a well managed independent firm that can give them exposure to this segment. They recognise that the SME sector can provide high returns and we believe that helping SME business operators grow their businesses can produce consistently high returns for investors.
“One central feature of Anacacia Capital’s approach will be the use of a business advisory council. While not common in Australia, European and US private equity firms are increasingly using this approach.
“We believe that partnering private equity practitioners with leading Australian chairmen and CEOs who have deep operating expertise can add tremendous value to SMEs,” he said.
Mr Samuel said Anacacia Capital expected to shortly name high profile figures as members of its business advisory council.
He said Anacacia Capital expected to raise funds from a mixture of institutional investors, very high net worth individuals and family investment offices although it was yet to formally commence fundraising.
Mr Samuel resigned from ANZ Capital last year. He was then chairman of the private equity management committee. He had helped grow that business to a stage at which the ANZ Bank had allocated $400 million from its balance sheet to private equity investment and over $100 million had been raised from co-investors.
The business had achieved internal rates of return in excess of 40 per cent.
© Private Equity Media February 2007