SA bright ideas drawing investors
INCREASING interest from global investors seeking new intellectual property pathways to grow is pushing SA companies to focus more on research and development, according to a new report.
INCREASING interest from global investors seeking new intellectual property pathways to grow is pushing SA companies to focus more on research and development, according to a new report.
Deloitte’s South Australian Pools of Capital Monitor shows foreign cash invested in SA businesses significantly increased over the past financial year with the number of transactions close to the total level of activity in the previous two years.
This includes Japanese technology giant Konica Minolta’s January acquisition of a significant interest in Adelaide health-focused IT company Clevertar, a spin-out of the Flinders University.
Clevertar introduces virtual agents — clever avatars, including its flagship Anna — through smart devices into care environments to support patients with chronic conditions at a fraction of the cost of human intervention.
Clevertar, co-founded by Tanya Newhouse and Martin Luerssen in 2012, was recently judged the global Best Start-Up — Tech Innovation by a panel including Apple co-founder Steve Wozniak who said he wanted the technology for “for every little kid — for education as well as for the elderly”.
Deloitte’s Adelaide-based valuations partner Stephen Adams said Konica’s interest was one example of cashed up overseas buyers looking to forge into lucrative Asia-Pacific markets through investment in SA companies with intellectual property and know-how.
“These corporations are increasingly targeting some of SA’s least known (but highly successful) companies that have “scalable” and “exportable” IP,” he said.
“Not only is this having a positive impact on the future growth paths for IP-rich local firms, it’s also forcing Adelaide companies to consider allocating more capital towards R&D activities to sustain and grow their business in the local market,” Mr Adams said.
In February, US-based women’s health care products supplier CooperSurgical paid US$20 million for The Pipette Company (TPC), one of the many reproductive-focused entities co-founded by SA Professor Colin Matthews.
Thebarton-based TPC makes and distributes micro pipettes, a laboratory tool used to transport liquid, in the assisted reproductive technology market.
CooperSurgical said TPC’s products are a “perfect fit” with its own Origio range of pipette offerings.
A US$35 million injection from global private equity giant KKR in handheld devices company Signostics is helping the company fast track research and development activity at its SA operations at Tonsley where co-founder and chief operating officer Stewart Bartlett is based.
“Often it’s large European or United States-based companies facing limited growth opportunities in their domestic markets that are looking to acquire new revenue streams,” Mr Adams said.
“The lower Australian dollar has also played a role, making offshore acquisitions cheaper for overseas buyers — particularly where the underlying IP is seen as the critical asset of the business.”
He said world-leading technology was one common factor attracting global investor interest.
“Five years ago such companies may not have looked at acquisitions below $30 million, however we have seen the radar lowered with prospects starting from as low as $5 million being considered as suitable acquisition targets.
“Intellectual property is what’s really driving this global interest and more often the value to the existing business owner is eclipsed by the value lens being applied by the acquirer who can exploit the IP across a global client base and market opportunity.”
Mr Adams said it was an exciting time for innovation in SA and companies looking to attract external investment needed to identify and focus on building their highly-valued assets.
RECENT OVERSEAS INVESTMENTS
2016
■ JANUARY — Japanese company Konica Minolta buys significant interest in Adelaide health IT company Clevertar for undisclosed amount.
■ FEBRUARY — US company CooperSurgical buys Thebarton-based The Pipette Company for US$20m.
2015
■ JANUARY
•Indian cosmetic products giant Emami’s UAE subsidiary Emami International FZE buys 66.67 per cent of SA organic skin and hair care products company Fravin and salon group Abache for about A$4m.
•Netherlands-based global IT company NXP Semiconductors increases stake in North Adelaide driverless vehicles technology company Cohda Wireless for an undisclosed amount, building on its early investment in 2013.
■ JULY — UK giant 3i Group’s subsidiary Aspen Pumps buys majority interest in Lonsdale air conditioning systems supplier Pro Pipe Supplies for an undisclosed amount.
■ OCTOBER — US company Merck & Co. spends US$9.5 million on minority interest in Thebarton biotech company Bionomics.
■ NOVEMBER — US private equity company Kohlberg Kravis Roberts & Co buys significant interest in Tonsley handheld medical devices company Signostics for US$35m.