December 2005

Plenty of deal activity to finish off the year:

• TMT Venture’s investment into Phitek Systems Ltd
• ANZ Capital’s two development capital investments into Bremca Industries and Fairfax Industries
• Direct Capital (including the BioPacificVentures fund) acquired a 51 per cent. shareholding in NZ Pharmaceuticals
• AMP Capital Pencarrow Fund’s investment into New Zealand Crane Ltd
• $2.5 million investment into ZyGEM (formerly Pacific GEM Ltd)
• $1.3 million investment into Optima (formerly Optimal Decision Technologies) by the Ice Angels Group
• Investment by BioPacific Ventures into Queensland company, Cleveland Biosensors
• $3 million investment into ECONZ by iGlobe Treasury
• $2 million investment into Virtual Katy by iGlobe Treasury
• $250,000 investment into the Richard Kavanagh business through the Escalator service.

In addition to all of that, in response to strong growth in MBOs and LBOs, Goldman Sachs JBWere launched the first LBO focused mezzanine debt fund in the New Zealand market on 3 November.

A very busy time for the NZVIF team too with the VIF Seed Fund Round 3 process now well underway. The Seed Co-investment Fund application process also kicked off in mid November. The first round of calls for applications for this fund closed on 30 November and 13 applications were received from New Zealand Angel investors and investor networks. VIF are working towards finalising approvals relating to this fund by the end of February 2006.

Also in mid-November the teams at ANZ Private Equity and ANZ Development Capital come together under one new team, ANZ Capital.

More details on all of the above can be found in the News section of the NZVCA website.

As mentioned in our last newsletter, we are currently putting together a (simple) online survey that will be e-mailed out to all NZVCA members in the week commencing 13 February. The feedback we get from the survey will form the base for NZVCA strategy development for the next two or three years and so please take the time to complete this survey if you can.

At the NZVCA Council meeting on 8 December Hamish Bell (ANZ Capital) and Andrew Lewis (Simpson Grierson) were confirmed as the new NZVCA Vice Chair and Secretary/Treasurer respectively. Congratulations to them on those appointments. The full NZVCA Council for the 2005/2006 year is Mark Dossor (Endeavour Capital) - Chairman; Hamish Bell (ANZ Capital) - Vice Chair; Andrew Lewis (Simpson Grierson) - Secretary/Treasurer; Brent Lawgun (Goldman Sachs JBWere); Franceska Banga (NZVIF); Martin Turner (Falcon Private Equity); Mark Edwards (No 8 Ventures); Steve Hampson (Canterbury Innovation Incubator); Jon Hooper (Ernst & Young); Tony Bishop (iGlobe Treasury); Richard Hughes (Direct Capital) and Murray Gribben (AMP Capital Investors).

At the conference on 3 November the NZVCA and Simpson Grierson launched a comprehensive "Guide to Venture Capital Term Sheets". Our thanks to Simpson Grierson for all of their efforts in putting this great resource together.

The aim of this Guide is to provide those who are not familiar with the venture capital investment process with an outline of how investments can be structured, the terms and terminology typically used in a Term Sheet and the broader investment process.

The Guide is available in the Resource Centre/Industry Tools section of the NZVCA website.

NZVIF are currently looking to employ a Programme Manager to lead the development of the Seed Co-investment Fund. They are looking for a motivated manager with demonstrated investment acumen to join the NZVIF team.

Full details regarding this position are set out in the attached document. Please note though that applications for this position need to be received by 16 December.

We welcome the following new member:

Waterman Holdings - Full Member

Best wishes

Chris Twiss
ex NZVCA