ANZ winds down private equity fund
(18 June 2012 – Australia) After costing more than A$100 million, ANZ is finally moving to shut down a crippled private equity fund and end the six-year saga.
ANZ last week appointed Sal Algeri of Deloitte to liquidate part of the ANZ Business Equity Fund, which has accumulated losses of A$62.9 million.
Algeri will wind up the company portion of the fund. Responsibility for selling off its few remaining assets has been moved to a different bank entity, ANZ Specialist Asset Management.
Former ANZ chief executive John McFarlane launched the fund in 2006, at the peak of the boom, with high hopes that its plans to invest in small to medium-sized companies in Australia and New Zealand would pay handsome dividends.
However, many of the companies in which it invested wilted when the global financial crisis struck two years later.
This prompted new boss Mike Smith, who has disparaged private equity as a ''cottage industry'', to begin the long process of winding down the fund.
Investors who poured A$113 million into the fund have so far clawed back just 41¢ in the dollar through distributions, and the appointment of Algeri raises doubts as to whether any further payments will be forthcoming.
Those investors include ANZ itself, which tipped in A$19.5 million. But the venture has cost the bank hundreds of millions more. This is because it used shareholders' money to co-invest in businesses backed by the fund, putting at risk a reported A$400 million.
He said there were only ''a handful'' of assets remaining in the fund, which the bank had been winding down since 2008.
''To reduce the ongoing cost of running the fund for investors, we destapled the trust from its management company, but will continue to operate the fund with ANZ Specialist Asset Management acting as its trustee,'' a spokesman for the bank said.
Algeri will wind up the company portion of the fund. Responsibility for selling off its few remaining assets has been moved to a different bank entity, ANZ Specialist Asset Management.
Former ANZ chief executive John McFarlane launched the fund in 2006, at the peak of the boom, with high hopes that its plans to invest in small to medium-sized companies in Australia and New Zealand would pay handsome dividends.
However, many of the companies in which it invested wilted when the global financial crisis struck two years later.
This prompted new boss Mike Smith, who has disparaged private equity as a ''cottage industry'', to begin the long process of winding down the fund.
Investors who poured A$113 million into the fund have so far clawed back just 41¢ in the dollar through distributions, and the appointment of Algeri raises doubts as to whether any further payments will be forthcoming.
Those investors include ANZ itself, which tipped in A$19.5 million. But the venture has cost the bank hundreds of millions more. This is because it used shareholders' money to co-invest in businesses backed by the fund, putting at risk a reported A$400 million.
He said there were only ''a handful'' of assets remaining in the fund, which the bank had been winding down since 2008.
''To reduce the ongoing cost of running the fund for investors, we destapled the trust from its management company, but will continue to operate the fund with ANZ Specialist Asset Management acting as its trustee,'' a spokesman for the bank said.
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