Former Australian-based minerals exploration group Resource Exploration has moved into the venture capital (VC) field in a bid to capitalise on Asia and Europe's high-growth broadband and Internet communication markets.
With a sole investment in Spanish mining interest Thundelaria failing to generate any returns, Burkhard Brauch, a former Morgan Stanley vice president and chief executive of the re-named Res. Ex, now Futurexone, said it was clear Res. Ex should move into the more dynamic domain of IT&T.
In the last six months, Res. Ex sold most of its WA mining assets and its only foreign investment, a $400,000 stake in Thundelaria, turning to the VC field this month. "We're not just looking at pure Internet companies, but broadband technology and service providers - those with a dedicated demographic group," Brauch said of Futurexone's acquisition strategy.
"The fact that a lot of Internet companies were grossly over-valued in the past doesn't make them any less attractive to us. They are some-thing with still a lot of opportunity," he added.
Futurexone's approach lies in aiming early and low, according to Brauch. "We really allow companies to take partnership in those without the liquidity or due diligence advantages - there is no other way investors can invest in very early stage companies," he said. Futurexone will only pursue businesses with clear strategic advantage in terms of partnerships with Internet content providers, for instance, or alliances with similar companies, Brauch explained.
First off the regional investment rank is Asian Internet group ViewInternet.com, a broadband ISP and high-speed TV access provider for business travellers. ViewInternet.com, a $35 million business, in which Futurexone has a 6 per cent stake, has 29 million hotel rooms registered to its services.
Futurexone also acquired 2.15 per cent of Spanish leisure and tourism portal Ocioteca, which according to Brauch could open solid content provision opportunities for ViewInternet.com once the Asian ISP grows.
Declining to name any potential local acquisitions, Brauch said Futurexone hoped to make two other broadband investments in Australia in 2001. The VC firm also has interests in a telco-focused eastern European print media and Internet content provider, which Brauch would not elaborate on.
Futurexone directors are forecasting $2 million profit within the next two years under the VC business model, which company sources said would continue to identify high growth equity and development opportunities in the IT, telco and Internet-related industries. Futurexone will fund these ventures through seed capital, IPO funding and capital injections, and provide specialist and management expertise.
Meanwhile, in the US the venture capital industry saw a decline in quarterly investment for the first time in two years, dropping to $25.9 billion for the third quarter of the financial year.
However, the industry had invested a total of almost $US80 billion in the first three quarters of the year compared to $33.7 billion for the 1999 corresponding period. Investment had shifted from e-tailing, B2B and B2C to infrastructure that supported the physical growth of the Internet, according to the National Venture Capital Association in the US.