Australian IT organisations looking to expand into overseas markets might have a new avenue for financing, with Newport Capital planning to set up a $100 million fund.
Newport Capital is an IT-focused corporate advisory firm. Established in 1989 by people from IT backgrounds, the company has provided guidance around Mergers and Acquisitions, capital raising, and ASX market IPOs (including the recent Dicker Data float).
Now it is hoping to raise a fund of $100 million to invest, primarily on companies looking to expand into rapidly growing Asian markets.
“We’ve written all our documentation and are now having first meetings with prospective investors,” Newport Capital managing director, Lou Richard, said.
“You get big value upticks when companies make successful cross border growth. We hope it’s going to be successful, but won’t know until perhaps May or June whether we’re going to get there.”
Richard has in the past been involved in funds management, and built up close relationships with collaborator organisations in Asia, Europe and the US to help those companies Newport Capital invest in break into the new markets.
“We have safe hands at the other end who do exactly what we do, and that significantly reduces the risk of market entry,” Richard said.
Under the plan for the fund, not more than 10 per cent will be invested in any one organisation. Minus management fees and reserve for follow-ons, that would leave around $80 million, or a maximum of $8 million per company.
“We think that’s enough to do some material things,” Richard said. “We’re talking about market entry by acquisition or investment. Perhaps $5 million is earmarked for acquisition to make market entry into Europe, for instance, and then they would scale up from there, providing they have safe hands at the other end to help them do the deal, we think that’s a very workable methodology.”