Australia’s small and medium-sized enterprises are increasingly seeking capital to grow, with private equity firm Anacacia Capital seeing more than 500 opportunities over the past year.
Jeremy Samuel, managing director of Anacacia Capital, said much of the institutional capital in Australia was now focused on larger companies.
“We keep our funds small so we can make meaningful investments in private and listed companies with less than $500 million market capitalisation,” he said. “There are many great opportunities there. Our private equity funds have seen over 500 SME opportunities on the past year. Our Wattle public equity fund focuses on more than 1000 ASX-listed companies with a market cap of less than $500m. We are focused on picking the top dozen or so that we think will generate long-term shareholder returns.”
Mr Samuel added that in these challenging economic times many business owners, who were reaching retirement, were particularly looking at capital solutions.
The company last week took a majority stake in LEDified Lighting, chaired by former Victorian premier Jeff Kennett, which LEDified said would help triple the company’s revenue as it aggressively grows.
Electrical products supplier Acculec, which is owned by Anacacia, announced late on Friday that it was expanding through the acquisition of the Jeminex Electrical distribution businesses Bri-Tech and Energy Correction Options.
“Anacacia have a great track record of partnering with management teams to successfully grow businesses,” Acculec chairman Kevin Clarke said.
Mr Samuel said that LEDified and Acculec faced similar issues to a list of other SMEs it had been involved with — Appen, Raffertys Garden, Home Appliances and Lomb Scientific.
“They were all medium-sized companies in established industries with a clearly defined need,” he said.
“Each were undergoing ownership change. They needed to ensure they had the right management, board and shareholder base to support the strategy.
“We don’t fool ourselves into thinking we can manage the businesses we invest in better than the CEOs and management teams that we back.”
Mr Samuel said that the companies were looking for Anacacia to be active investors who could provide extra intellectual capital and resources that were difficult for smaller businesses with little or no head office to access.
“Last week we brought together 40 of our CEOs and directors for an intimate conference to share insights together because running a small business can be lonely.”