A start-up company formed to commercialise one of Western Australia’s most promising home-grown technologies has closed down its operations after the owners concluded they would not be able to achieve commercial success.
A start-up company formed to commercialise one of Western Australia’s most promising home-grown technologies has closed down its operations after the owners concluded they would not be able to achieve commercial success.
Vitrostone has already sold assets from its pilot manufacturing plant at Neerabup, north of Perth, and is now trying to sell its intellectual property.
Its demise stands in contrast to the success of its ‘stablemate’, Advanced Nanotechnology, which listed successfully on the Australian Stock Exchange early this year.
Both companies were the result of research undertaken by Professor Paul McCormick and other staff at the Univerity of WA, and in its early days Vitrostone was seen as a bright prospect for commercial success.
The parallels between the two companies continued in 2002, when they won financial backing from the WA Local Government Superannuation Plan.
The super fund invested $1.5 million in Vitrostone, which was developing innovative building products, including pavers, and $2 million in Advanced Nano (formerly Advanced Powder Technology), which manufactures a range of products using nanopowders.
Specialist fund manager Hawkesbridge Private Equity effectively took over both investments in mid 2004, and emerged as the major shareholder in Vitrostone.
Hawkesbridge agreed to provide extra funding to help Vitrostone overcome initial commercial and production difficulties, attributed at the time to its rush to get to market.
Investment director Josh Rowe said a new board of directors concluded that Vitrostone should not try to be a manufacturer.
Instead the company focused on securing its intellectual property by obtaining patent protection.
The new board also concluded that pavers was a very competitive, low-cost market and therefore advocated alternative product applications such as wall cladding and panelling.
“You need to test products to make sure they are market ready, that is the first lesson,” he said.
Mr Rowe said he was confident Vitrostone had a future.
“It requires a larger player with a larger R&D facility and its own distribution network,” he said.
He said discussions were proceeding over the sale of Vitrostone’s intellectual property.
“There are a number of parties still interested,” Mr Rowe said.
The fate of Vitrostone contrasts with Hawkesbridge’s healthy profit on the sale of its shares in Advanced Nanotechnology. Its original investment of $3.7 million in March 2004 was sold six months later for $4.6 million.
The sale was completed in conjunction with Sydney broking firm KTM Capital, which managed Advanced Nano’s IPO in February this year.
The WA Local Government Superannuation Plan’s chief executive, Russell Wenban, said the outcome of the Vitrostone and Advanced Nano investments typified the private equity market, with some ventures failing and others performing very well.
He said the fund had about $70 million invested in private equity out of total assets of $750 million, and overall had achieved very good returns.
The super fund’s other private equity investments in WA have included battery maker ZBB Energy, Advanced Healthcare and ET Australia.
