Investment Management

The need for a professionally coordinated capital management team arises from the current weaknesses in many existing capital providers to understand the "missing link" in producing outcomes from investments, that is, funding plus project does not necessarily equal projected outcome.

Too many projects have been funded (or too many prospectuses / OIS's have been fully subscribed) only to find that the lack of planning and management has resulted in outcomes being substantially less than projected. Often the excuse is that the market place has changed; however, from our experience in reviewing under-performing companies and projects, the poor performance is usually due to:

• inadequate preparation of projections by management signed off by the board with a strategic plan that can DELIVER the financial outcomes projected;
• not agreeing critical dates and milestones and not having contingency plans if their are legitimate delays and thus extra funding requirements - ie a second stage funding mechanism with pre-agreed pricing structures;
• ineffective management;
• insufficient follow up on variances in the early stages;
• lack of independent assessment and monitoring of performance;
• lack of communication between investor and investee;
• failure to keep abreast of change in the market place (a reactive rather than proactive approach);
• insufficient due diligence in the early stages; and
• inappropriate imposition of a capital provider's regime on an emerging project, resulting in a mismatch of expectations and outcomes.

First Corporate was born from the desire of several professional firms and individuals in Australia, to provide a fully coordinated due diligence and monitoring team for venture capital and development capital projects in Australia and neighbouring Asian countries. The result is more than a corporate advisory group - we work closely on the project to contribute to the score, not merely keep the score.

The objective of the project management team is to progress the investee's growth cycle such that the investor group can exit its investment at the appropriate time, ensuring the investee is in a position to continue based on the solid foundation laid. To this end, First Corporate has spent a considerable amount of time developing:

1. extensive state-of-the-art due diligence checklists and procedures;
2. contemporary project assessment techniques;
3. competitive "deal structuring" profiles;
4. the Shareholder Agreement that underpins the investment into the investee - this is a vital agreement as it details matters such as covenants, critical date compliance, default aspects, structuring issues, follow-on funding, pricing and exit mechanisms;
5. monitoring procedures and reporting formats; and
6. communications technology to allow interaction with investees notwithstanding their location.

The investor's exit may be simultaneous with a listing of the investee, or simply by way of restructuring its gearing ratios given the added strength and profitability achieved by the team approach over the previous few years. First Corporate's management approach focuses not only on the immediate funding round but subsequent capital requirements and exit strategies.

"...more than a corporate advisory group - we work closely on the company to contribute to the score, not merely keep the score."