Contact: Vessa Playfair
Deloitte
Director of Communications
0419 267 676

Contact: Graham Reid
Deloitte
Partner - Corporate Finance
9322 5491

The outlook for the private equity market is one of strong growth, according to the latest Private Equity Confidence Survey from Deloitte.

The Deloitte survey of over 140 Private Equity funds in Australia and New Zealand has also revealed that with expectations of further funds entering the market and increasing competition, Venture Capitalists (VCs) continue to search for investment opportunities with 77% of respondents, the largest proportion in the history of this survey, expecting to be net buyers over the next six months.

Key findings from the survey reveal:

• The majority of respondents (73%) expect the economic climate to remain the same over the next six months
• The proportion of VCs expecting improvement in the financial performance of their portfolio increased for the fourth consecutive quarter to 73%
• An increasing proportion of respondents (63% this quarter up from 46% in Q2 2005) expect entry multiples to remain the same, whereas 20% of respondents expect entry multiples to increase
• The proportion of VCs expecting to be net buyers over the next six months has increased for the 3rd consecutive quarter to 77%
• An increasing proportion of respondents (30% this quarter up from 19% last quarter) expect the availability of debt finance to improve over the next six months and, correspondingly, the difficulty in raising new debt to ease (23% this quarter up from 15% last quarter).

Deloitte Corporate Finance partner, Graham Reid, said "the Australian private equity market is continuing its strong growth and fund raising activities remained at high levels in the last quarter of 2005.

"This quarter we asked VCs about the impact of complying with the recently announced anti-money laundering ("AML") legislation. Although 43% of respondents have indicated that compliance costs will not be an issue, it is interesting to note that another 44% have not even considered the issue or are unaware of the legislation.

"The key focus for VCs over the next 6 months will remain on five key sectors: support services; engineering & manufacturing; food & drink; healthcare & pharmaceuticals and retail, but with further funds entering the market, 53% of VCs expect an industry skills shortage in the next 12 months." Mr Reid commented."

About PECS

The Deloitte PECS provides a comprehensive snapshot of VCs’ expectations for the next six months and acts as an indicator of changing confidence levels in:

• Economic climate
• Deal activity
• Availability of funding and investment focus

The results produce a forward looking measure of the overall sentiment in the Australian and New Zealand VC community, which is extremely relevant to immediate deal flow. This, our 18th survey,

is modelled on similar quarterly surveys carried out by our colleagues in the United Kingdom, North America, Europe and elsewhere. This facilitates comparisons of trends and views expressed by the global venture capital community with our domestic marketplace. The Quarter 4 2005 PECS was conducted in December 2005 amongst a population of approximately 140 VCs in Australia and

New Zealand. The survey covers the period October to December 2005 and includes projected views on the next six months. The next questionnaire is due to be distributed in March 2006.