Investor Netus Announces Management Buyout of News Ltd’s 50%

25th May 2012. Australian technology investor netus has announced that management has bought their joint venture partner, NEWS Ltd out of their 50% netus shareholding. Whilst the amount has not been disclosed, newspaper reports estimate it to be A$22.5m. Moving forwards, netus will be wholly owned by the management team.

In March Daniel Petre, then executive chair, announced a refocus of netus and his stepping down to non-executive chairman. Mr Petre said the company had produced an internal rate of return of 63 per cent over the past six years:

“Over the past 5 years we have undertaken 9 investments. Of these we have exited four;

  • (returning 3X our initial investment at an IRR of 91%)
  • ReachLocal (returning 5X our initial investment at an IRR of 80%)
  • Tantalus Media (we have recouped 60% to date with further returns to come)
  • Switchwise (returning 3X our initial investment at an IRR of 48%)

The remaining portfolio of five businesses (comprising of Downstream Marketing, Allure Media, Buyster, The Video Company and OurDeal) is performing well and is now at a relatively mature stage of development.”

Stephen Rue, Chief Financial Officer, of NEWS Ltd commented “Our relationship with the management team has been informative and valuable. Netus has also created some very valuable companies in the Australian market. However going forward we want to focus our resources on larger opportunities than those within the scope of netus. We wish Daniel and the team well as they continue to develop exciting and successful internet startup companies”.

Chairman of netus, Daniel Petre, said “NEWS has been an outstanding and supportive partner during the last nearly 6 years. They have allowed us the scope to pursue the opportunities we felt appropriate and they have always supported our approach and investments. I am pleased that we have delivered an IRR of over 50% during the period but understand that NEWS wants to focus on larger investment opportunities in the digital space”.

Daniel Petre set up netus in 2005 with a $40 million investment fund from News. Prior to this Mr Petre went on to found ecorp, the internet and technology division of the Packer family’s former Publishing & Broadcasting Limited, during which time he established ninemsn (a joint venture between Microsoft and Nine Entertainment Co), and eBay Australia and New Zealand. Before this he spent nine years at Microsoft, as managing director of Microsoft Australia and subsequently transferred to the US where he reported directly to the software company’s founder, Bill Gates, as vice-president of the workgroup division.

In regards to the future Mr Petre said “Now that we have clarity over the structure of netus going forward, we are going to ramp up our effort with regard to engaging in new partnerships with high potential consumer web businesses.”

“Our model has always been to build start-ups to the point where they can be acquired by more mature businesses whose appetite for risk and ability to nurture entrepreneurial businesses is lowers than ours. Several businesses in the remaining portfolio are now attractive to third party buyers.”

“At the same time, the opportunity for building further businesses has changed. Going forward, we need to be ever more focused on execution, as well as investment. For netus, the sweet spot for investing has always been in partnerships where execution matters as much as investing. Going forward it is likely that we will be focussing on investments requiring smaller amounts of capital, where we can bring to bear our unique operational skills and experience, and we will look to apply this resource to a small portfolio of very high growth entities.”

“To reflect this, our processes and team need to evolve. Firstly after five year as Executive Chairman I have decided to step back to the Chairman role. Secondly I am pleased to announce that Alison Deans will step up to the role of CEO of netus. I have had the pleasure of working with Alison at ebay, ecorp and now at netus, and she will be an outstanding CEO for netus.”

“As we will be focusing on smaller investments and not significantly growing the size of the portfolio under management, Craig Blair has decided to leave. Craig’s interest is in engaging in an investment or media company with larger digital investments and so he has, sadly, decided to pursue opportunities outside of netus. Craig has been a wonderful member of the netus team and we will miss his significant contribution.”

“I am pleased to also announce that Guy Reypert will assume the role as head of Business Development for netus. Guy has added a lot of value to the group since his arrival nearly two years ago and I look forward to working with him in his new role.”

In the 12 months to June 2011, netus generated $17 million in revenue, down from $31 million in 2010 due to divestments, and paid a dividend of $23 million to shareholders, according to financial accounts lodged with the Australian Securities and Investments Commission.

During the 2012 financial year netus has received about $21 million in gross proceeds from the sale of its interests in e-commerce company Buyster, group buying website OurDeal and online advertising business Downstream Marketing.

Current investments include The Video Network (29 per cent), an online video advertising sales and consulting business, and niche online publisher Allure Media (85 per cent).

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