PERTH venture capital outfit Paramount Capital Limited has change tack, deciding against a $2.2 million initial public offering for 40 per cent of the company’s equity.
Paramount director Jeffrey Broun issued a statement saying that, while many investors are endorsing and supporting the “Paramount model”, they also are keen to invest directly into some of the target projects.
The company originally issued a prospectus in November last year, with listing expected by December 18. The philosophy was to establish a listed vehicle to enable investors to gain a ‘tradeable access’ to the value upside associated with private equity investments.
However, Mr Broun said investors were not keen on supporting a listed investment vehicle.
“The attraction to investors was [that] by being a ‘member’ of Paramount they would be given access to investment opportunities directly, thereby creating their own portfolio of professionally managed projects,” he said.
“Their priority was not as much a listed stock in a managed pool but a direct investment into the target investment company of their choice and from where the underlying value is generated.”
Despite this Mr Broun maintains that a funding gap exists for venture capital firms such as Paramount in which to thrive.
Paramount is now seeking to list later this year on the strength of a particular project.
“Given the above investor dynamics we have decided to cancel our public issue of shares and concentrate instead on providing the interested investors with direct private equity entry into specific projects we prove up over time,” Mr Broun said.
An associated company, First Corporate Pty Limited, will be spearheading the work to make private equity investments IPO ready.
At the time of the issue of the prospectus, Paramount was undertaking due diligence on a Perth-based company involved in the extraction and cryogenic storage of stem cells. The potential investee is involved in the storage of stem cells from tissue by the donor for potential use by the family. Another project being reviewed involved MPL – a company providing solutions to manage workplace risks and measure the impact on environments to improve the quality of life for the community.
Paramount was hoping to use money raised through the prospectus on SurecliX Pty Ltd. SurecliX attempts to create greater value for Internet publishers by providing innovative online advertising.
Up to $1 million was expected to be channelled toward Global Gaming Entertainment Limited, which provides an on-line horse form for the racing industry. Paramount already has a 9 per cent interest in GGE but hoped to lift this to around 60 per cent following the IPO.
GGE is targeting individuals aged between 18 and 40 years old with online games and competitions delivered on PCs, mobile phones and hand-held organisers. GGE plans to list on the Australian Stock Exchange within the next 12 months.
Sanford rejects IWL
SANFORD Limited has recommended to shareholders that they reject an offer made by IWL on January 15 and the amended supplementary bidder’s statement on February 4.
Sanford commissioned KPMG Corporate Finance (Aust) Pty Ltd to provide an independent expert report on the offer.
KPMG assessed the value of each Sanford share in a range from 31 cents to 39 cents. IWL’s offer was for one new IWL share for every Sanford share held and 19 cents for every Sanford share held. KPMG says it was reasonable to expect IWL’s shares to trade at around 18.5 cents in the immediate future.
Since its inception in 1996, Sanford has grown its revenue significantly. From 2000 to 2002 it doubled its revenue to around $20 million.
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