Investment Criteria

SPEL aims to construct a balanced portfolio of investments by identifying companies that possess :

• Established profitability in growing industries and markets.
• Experienced management.
• High growth potential.
• Appropriate gearing.
• Fair valuation.

SPEL is able to provide potential Investee Companies :

• Assistance through organisational development, strategic planning, recruitment, mergers and acquisitions, fund raisings and exit strategies.
• A ‘true partnership’ arrangement. With the perpetual nature of SPEL we have a 3 to 7 year investment horizon, meaning that we focus on building successful companies and relationships.
• Debt or equity funding as part of the investment mix.

Investment Exclusions :

• We do not consider investments in start ups and seed opportunities.

 

Criteria	Target / Hurdle
Investment Amount	$10m min (at min level require potential for additional) Not more than 25% of SPEL net assets
Company Profitability	Current EBITDA of $3m+
Age of Company	4+ years (consider history)
Preferred Domicile of Company	Australia & New Zealand
Investment Timeframe	3 - 7 Years
Preferred level of investment	50+% of equity (consider 33%+ with right to get to 50%)
Minimum projected SPEL return	25% IRR
Equity Participation	Management co-invest
Number of key staff	Minimum 3-5
Experience of key staff	Extensive knowledge of company and industry
Industry growth prospects	Able to meet target return
Company sustainable competitive advantage	Material and identifiable
Customer base	Established and broad

 

 

 

Investment Process

• Investment Criteria: Measure proposed investment against quantitative & qualitative measures.
  
• Internal Ranking: Score out of 30 (1-5 per area) used to prioritise investments around six areas: Management, Industry, Growth Stage & Prospects, Financial Metrics, Sustainable Competitive Advantage & Price. This allows us to decide which investments progress to the next stage.
  
• Preliminary Investment Report (PIR): Takes an in depth look at the company, the business environment in which it operates and the valuation methodologies that should be applied.
  
• Investment Report (IR): builds on each component of the PIR and includes a valuation of the business and funding considerations.
  
• Indicative Deal Memorandum (IDM): establishes funding structure and due diligence budgets.
  
• Investment Committee Approval: Due diligence budgets are also signed-off.
  
• SPEL Board Approval: Due diligence budgets are finalised and signed-off.
  
• Due Diligence is conducted – Accounting, tax, legal, customers/suppliers, IT and others as required.
  
• Final Investment Committee and SPEL Board approval is sought prior to any legal documentation being finalised and the investment made.
  
• Implement 100 day plan post investment to unlock latent value quickly.
  
• Set up company with appropriate capital structure, develop strategic plan and monitor ongoing operational performance and strategic direction.
  
• Achieve maximum value on realisation through building the process early and monitoring market conditions and industry developments.