First Guardian Innovation Fund, LP

Under this Information Memorandum, First Guardian Capital is offering interests in the Fund up to maximum total capital commitment of A$ 15,000,000 (Offer). Investors who participate in the Offer will become Limited Partners subject to the terms of the Information Memorandum of the Fund and the Investment Documents.

The Fund’s investment mandate is to invest in private companies that provide good prospects for capital growth over a 3 to 5 year time horizon. The Fund will seek to invest in a diverse (by industry and stage of development) set of opportunities. An investment undertaken by the Fund will ordinarily be one that the Manager considers:

  • has a relatively more attractive valuation than that of companies in a comparable listed peer-set;
  • is at an early or expansion stage of development and has strong growth prospects;
  • is driven by highly experienced management with a strong track record in the relevant sector being invested;
  • has a defined business model with an articulated competitive advantage for the market in which the company operates; and
  • has a path to liquidity within 3 to 5 years of investment.

The Sectors for Investments

Life Sciences and Health Management

Disruptive Innovation

Online Services

Clean Technologies

Agricultural Technologies

Electronics Automation

Education and Training

Structure of the Fund

The Fund will be structured as an incorporated limited partnership registered as a venture capital limited partnership or VCLP (Partnership). It is intended that most persons investing in the Fund (each, an Investor) will become limited partners in the Partnership, although additional co-investment vehicles may be established to facilitate investment by particular persons. Persons investing in the Fund are referred to below as Investors.

The Partnership is to be known as the First Guardian Innovation Fund, LP. The general partner of the Partnership will be another incorporated limited partnership to be known as First Guardian Management Partnership, LP (General Partner). The general partner of the General Partner will be a company formed and registered under the Corporations Act to be known as First Guardian Innovation Fund GP Pty Ltd (Ultimate General Partner).

The General Partner will designate the Manager (First Guardian Capital Pty Ltd, an authorised representative under AFSL No. 302538) as the manager of the Fund.

Investment Parameters

Individual investment time horizons are expected to be 3 to 5 years, so that the earliest realisation event could be expected in year 3, with the majority of investments achieving an exit event by year 7. To achieve an appropriate degree of diversification, the initial investment in any one investee company after first close cannot exceed 25% of the Committed Capital of the Fund. Investments may be made at any time after conditional registration is received.

The Fund will typically seek to have a controlling equity stake in the investee company, to ensure significant influence over the investment. In the event that a minority equity stake is taken, the Manager will seek to ensure that adequate protection is provided within the shareholders’ agreement, with the Fund having sufficient influence over key decisions made by the investee company’s management and board of directors. The Manager on behalf of the Fund will usually have the right to appoint a representative to the board of each investee company.

Leverage may be used in investee businesses, with gearing in the investee company generally not exceeding 100%.

Following the Investment Period, the General Partner is permitted to make follow-on investments until the Fund is terminated.

Investments Details

Minimum Investment

Minimum capital commitment for any Investor is A$ 200,000, unless a lesser amount is specifically permitted First Guardian Capital.

Investment Period

The Investment Period for the Fund will run to the fifth anniversary of the first closing date, unless extended by approval of Investors whose capital commitments represent at least 75% of the Fund’s capital commitments.

Limit on International Holdings

The Fund may hold up to 20% of the value of its portfolio in non-Australian domiciled investments. It will selectively review opportunities not available in Australia.

Entry Fee

A one off entry fee of 1.5% (plus GST) of the aggregate of all capital commitments, of the Investors committed at that closing, payable by the Fund to the Manager one month following the relevant closes.

Management Fee

The following management fees are payable to the Manager:

  1. During the Investment Period: 2.0% per annum of the aggregate of the capital commitments of the Investors (excluding management team) (plus GST); and
  2. After the Investment Period, 2.0% per annum of “adjusted capital commitments” of the Investors (plus GST).

Distributions of income and gains

The following management fees are payable to the Manager.

  • first, to the Investors until they have received their drawn capital from time to time;
  • second, to the Investors until they have received in addition to their drawn capital from time to time, an amount equal to an 8% IRR on such drawn capital;
  • thirdly, to the General Partner as carried interest, until the amounts that it has received under this provision equal 20% of the aggregate of the amounts it has received under this provision and those amounts paid to Investors under the immediately preceding paragraph;
  • lastly, 80% to the Investors and 20% to the General Partner as carried interest.