2010 Annual Report - Harbert Management Corporation

Australian Private Equity
The strong Australian economy is currently an attractive place to invest
capital. An unparalleled economic record, world-class industry capabilities,
buoyant labor market, immense natural resources and the geographic
advantage of access to the fast growing Asian region means that Australia
has become a very attractive foreign investment destination.
Within this economy, HAPE I is one of the few private equity funds that
operates in the lower-middle market. We define this market as small
to medium sized businesses with an enterprise value between $10
million to $100 million. As a team, we have extensive experience with
the requirements and intricacies for investing in this space, helping
management navigate rapid growth, understanding the challenges of fast
changing industries or managing the intricacies of succession planning.
A lack of competition from other private equity funds in this space provides
the opportunity to invest in the very best businesses and prospects. The
largest challenge we typically face is orchestrating agreements amongst
the relative participants, whether it’s banks providing leverage or founders
agreeing to sell. No one is moving as fast as they did prior to 2008 and the
global financial crisis.
Over the last half of 2010, and especially the last quarter, we have seen an
increase in the quality and quantity of investment opportunities. We made
our third investment at the end of 2010 and expect to make a fourth in the
first half of 2011. This will take our portfolio to four investments and likely
see us fully invested in HAPE I.
We are committed to providing our investors with above average industry
returns by capitalizing on our strengths, maintaining focus on our niche,
and taking full advantage of the dynamic Australian economy.
A lack of competition from
other private equity funds
in this space provides the
opportunity to invest in
the very best businesses
and prospects.
Harbert Management Corporation 42