PEFIII - Fund at a glance

Fund aim

To acquire and develop mid-market businesses that have significant commercial exposure in Australia and New Zealand. We target companies that have:

• an enterprise value of between $20-$100 million and earnings before interest, tax and amortisation (EBITA) of between $3-$20 million
• a solid financial track record
• a successful management team
• the potential for business growth.

Investments may take the form of management buyouts, management buyins, industry consolidation or succession planning.

Structure

A closed-end unlisted fund comprised of two parallel unit trusts: Private Equity Fund IIIA and Private Equity Fund IIIB. Investor commitments, investments made and all fees and expenses relating to the Fund are split equally between the two trusts.

Return objective

To achieve a return of 20% per annum (after fees and expenses and before tax) over the life of the Fund.

A profit share hurdle of 8% pa (after all fees and fund costs) applies, with the Manager receiving a sliding scale performance fee when the investors' profit amount exceeds this hurdle rate.

Term

10 years (from date of the final close) with the opportunity to extend for a further 2 years (requiring investor approval).

Other conditions

• The fund may co-invest with another person or entity
• The fund may borrow amounts of up to 25% of the total committed capital. All borrowings will be repaid within 180 days.

Inception date

31 December 2004

Closing date

Closed

Recommended investment timeframe

This is a closed-end 10 year fund. There is no redemption facility prior to the maturation of the fund.

Risk rating

High

Distributions

Paid on the realisation of any asset or when other income (such as company dividends or return of capital) is received by the fund.

Minimum investment

A$10 million. Commitments are drawn down progressively with 14 days notice.

Buy/sell spread

N/A

Fees

Management Fee

• Years 1 to 5: 2% pa of committed capital from first close (4 January 2005) through to the 5th year (from final close). The management fee on capital committed after the first close is back-dated to the first close.
• Years 6 to 10: 2% pa on the drawndown capital less capital returned less realised losses.

Performance fee:

• When the fund has returned to investors their drawn down capital plus 8% per annum, the remaining proceeds will be split between Unitholders and the Manager in a 50% and 50% allocation.
• The fee reduces to a share equivalent to 80% Unitholders and 20% Manager, once the performance fee paid to the Manager is equal to 20% of the total return paid by the fund.

Further information on the fee structure is available in the Private Equity Fund III Information Memorandum.