CFO Network Event: PrivateEquity Update

8 June 2010

Introduction to Archer Capital

Established in 1997 and is an independent Private Equity firm

Currently has A$2 billion of funds under management or advisement, provided primarily by

large Australian super funds as well as several international private equity investment funds

Substantial in-house operating experience and a strong operational focus

Since 1998 Archer Capital has completed 25 investments with a total deal value of $4 billion

and on 15 realised deals has generated a gross IRR of over 50%

Current Investments

Archer is one of the largest & most successful Private Equity managers in Australia

Archer Capital Fund Mandate

Preferred Business Attributes:

Strong sustainable cash flow Demonstrable competitive advantages Organic and strategic growth/margin options High quality and ambitious management Majority ownership preferred

Industry Sectors: All industries considered

3

Private Equity Spectrum

Seed / Venture Capital

Expansion Capital

Buyouts (LBOs, MBOs, MBIs, etc.)

Archer Focus

Archer is focused on buyouts

4

Investment Approach

In embryonic markets, less competition leads to low pricing pressure and a

“buy low, sell high” approach can generate superior returns

As the market matures, deep capital markets price risk more efficiently

reducing the returns available from financial structuring alone

Superior returns in mature markets arise from an ability to increase value

during the period of ownership, which requires:

• Identification of value creation opportunities during deal assessment

• An ability to drive operational performance, and hence value creation, during the

period of ownership

Increasing

Market

Maturity

Archer believes that in order to generate superior returns, Private Equity managers must be owner-operators and not simply geared passive institutional investors

Private Equity Activity: The last five years

Source: Australian Private Equity & Venture Capital Association Limited, Fiscal Year Ended June 30, 2009

1,5601,540

2,1162,118

1,392

584

891191331329788

FY09FY08FY07FY06FY05FY04

No of Companies

Funds Invested (AUDm)

Over past five years there was a total Private Equity investment of $8.7b into 570 Australian companies. FY09 activity was 27% down on FY07 in terms of amount

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Private Equity Activity: the impact of debt and leverage

Acquisition Multiples Paid by Private Equity Use of Leverage in Private Equity Acquisitions

7.1x

9.9x

8.9x

7.4x

5.6x5.6x5.0x

5.9x5.6x

2000 2001 2002 2008200720062004 20052003

Purchase Price / EBITDA

2.9x

5.5x5.1x

4.2x3.4x

3.9x3.8x2.9x

2.0x

200820072006200520042003200220012000

Debt / EBITDA

There is a strong correlation between transaction multiples and the availability and term of acquisition debt.

However... reports of Private Equity’s demise have been exaggerated

1,277

5,612

4,584

3,6143,453

863

1,5601,540

2,1162,118

1,392

584

FY09FY08FY07FY06FY05FY04

Funds Raised

Funds Invested (AUDm)

Source: Australian Private Equity & Venture Capital Association Limited, Fiscal Year Ended June 30, 2009

Private Equity investment in Australia will continue to be a factor based on the amount of capital that has already been raised. In the past five years the amount of Private Equity monies raised amounted to $18.5b compared to $8.7b invested.

Private Equity is a different form of company ownership

At the core of Private Equity is a fundamentally aggressive focus on equity returns and some different operating principles...

Attributes / management tools

Private Company / Family owners

Public ownership

Private Equity

Access to Capital ?

Fast decision-making

Management equity

Strategic clarity and a medium term finish line

?

Heavy investment where necessary

Privacy

Use of leverage with p / g’s

At the core of Private Equity is a fundamentally aggressive focus on equity returns and some different operating principles...

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Questions