06/04/05 Loscom, Australia's second pallet company is proving that.Private equity powered its local growth to be a challenger to our own multi-national CHEP brand, owned by Brambles.

Now Loscom is a growing force in Indonesia, which is entering the
pallet age in transport logistics as multi-national companies expand
there. And it's expanding in Singapore, Malaysia, Philippines, Thailand
and Hong Kong.

Affinity Equity Partners bought Loscom for $250 million from DB Capital
Partners, the private equity arm of Deutsche Asset Management
(Australia), which has $560 million in funds under management and a
team of seven in Sydney. (Listed retail fund ING Private Equity Access
has money invested with DB, which recently doubled its money when it
sold out of Tempo Services.)

DB onsold Loscom because it did not have the Asian network to expand
there.

Affinity did it as an independently owned buyout fund manager
established in 2004, as a spin off from UBS Capital.

It has 18 investment professionals in Hong Kong, Singapore, Seoul and
Sydney, has raised the Affinity Asia Pacific Fund and manages $US1
billion ($1.4 billion) of funds and assets.

Typically, it invests for four to six years, with incentivised
management to enhance the value of the business through new growth
strategies, expanding the network, adopting global best practices
processes and capital structure.

"Loscom is moving into new countries, establishing a footprint across
Asia and through to Australia," Affinity director Brett Sutton says.
"Our ultimate vision is to be a global player like CHEP, a dominant
player in Asia."

Although it is an Australian-based company, Loscom is owned by Affinity
with private equity money from investors in US and British pension
funds.

Affinity is talking to Australian super funds about managing
investments for them.

"There's plenty of deals in Asia, particularly Australia, Korea and
China," Suttons ays.

At the bottom end of the private equity spectrum are good ideas from
university scientists, intellectual property that is worth backing.

For example, early-stage investor Allen & Buckeridge has six venture
capital professionals, manages $250 million in capital and boasts 10
companies that started from Australian research labs.

As a manager, it assesses whether there is a market for the invention,
attracts a commercial champion, builds the team and management, creates
a commercialisation path, and provides guidance and overseas links.

So, for example, A&B executive director David Landers is on the board
of RPO, which developed a polymer formulation for optical waveguides
used to make new-generation touch panel screens for consumer electronic
devices such as Palm organisers, games and mobile phones.

It has attracted overseas private equity in the latest round of capital
raising to fund development, preparations to manufacture and a move of
the corporate headquarters from Canberra to California.

Investment came from GE Equity, Germany-based BASF Venture Capital and
Japan-based JAFCO Asia, as well as Neo Technology Ventures, Jolimont
Ventures Australian Capital Ventures and the Allen & Buckeridge (80 per
cent government backed) Emerging Technologies Fund.

Some money from super funds finds its way into this most risky
pre-profit sector.

"If you are giving money to a venture capital manager, you would be
looking for 26 per cent internal rate of return," Landers says. "The
risks are high - this is the steep end of the risk-reward curve.

"Yet this is technology Australia can be proud of and it is attracting
top-tier overseas investors and companies like Intel."

Another invention from the A&B emerging technologies fund is Vast
Audio, the world's first spatial hearing aid that supports listening in
noisy environments. It was developed at the University of Sydney.

CEO Jonathon Wolfe says he expects hearing-aid company tests in about
18 months. If successful, the venture will earn income from royalties
for the technology and ultimately realise its value by selling out to a
hearing aid company.