Pooled development fund Growth Infinity is hoping to raise $5 million in seed capital to invest in Western Australia’s small to medium enterprise sector
Growth Infinity has lodged a prospectus outlining its plans to issue up to 10 million 50-cent shares with a further 10 million free options.
Funds raised will be invested in up to 16 predominantly WA-based SMEs to achieve an initial spread of investments.
Growth Infinity chairman Michael O’Connor, formerly head of WA’s Corporate Affairs Office, said the fund planned to progressively raise up to $100 million over the next five years for investment in WA-based SMEs.
The intention is to build up a port-folio of about 75 SME investments.
“At the end of this period Growth Infinity will seek to identify the most appropriate opportunity to exit its investments and achieve a capital return to shareholders,” Mr O’Connor said.
Growth Infinity’s board includes former Home Building Society chief executive Jim Freemantle, who was a director of defunct pooled develop-ment fund Mentor Investments, Dennis Ward-Fay, and Ronald McNally.
Pooled development funds are companies established under the Pooled Development Fund Act that raise capital from investors and use it to take equity in Australian SMEs.
In return, the funds and their shareholders are taxed at lower rates on income generated through a fund’s business activities. Income from investments, whether dividend, capital gains, or otherwise, is taxed at 15 per cent rather than the full corporate tax rate of 30 per cent.
WA’s share of the national pooled development fund sector is relatively small, with just seven of the 100 funds currently operating based in Perth.
The seven funds based in Perth include Euromicrocaps, established last year by chairman David Somer-ville and managing director John Davidson. It bolstered its board in July with the appointment of former state development minister Clive Brown and Post Data founder Peter Milner as non-executive directors.
Euromicrocaps has made five investments to date, including renewable energy company Solar Sales, financial services company Questus Capital, weed treatment developer Weedsafe and mining services company Cavico Australia.
Pooled development funds were introduced into Australia’s capital market in 1992 and their numbers rose steadily to 126 by 2000-01.
Annual capital raisings of the sector peaked in 2000 with $148 million and $144 million in 2001.
Capital raised from investors was $48 million, $47 million and $51 million respectively in the subsequent three years.
Pooled Development Funds registration board chairman Brian Watson said the 2003-2004 year was an eventful one for the PDF board.
“In addition to the normal range of registration, discretion and revocation requests, the board dealt with the first group of venture capital limited partnership registration applications to flow from the introduction of this ini-tiative by the Australian Government,” he said.
