SYDNEY - More than A$21 million will be invested in biotechnology projects by Australian venture capital funds as part of a new government-led investment program designed to encourage technology.
The Australian government has announced it will provide A$130 million to four selected fund managers to invest in promising Australian high-tech projects, provided the managers can attract about A$65 million from private investors.
Of those four fund managers, two - Rothschild Bioscience Managers Ltd. and Amwin Management Pty. Ltd., both based in Melbourne - stated they intend to look at biotechnology projects, with Rothschild Bioscience intending to invest about half its funds in biotechnology.
Last week both Rothschild and Amwin said they were considering investing in promising projects, but declined to give any details.
This new government program, called the Innovation Investment Fund (IIF), was announced in 1996 as partial compensation to industry for a sharp reduction in tax breaks for research and development. As reported at the time, scaling back the tax break saved the Liberal-National (conservative) government about A$1 billion a year.
As originally proposed, the IIF program will involve the government investing A$540 million over four years in selected funds specializing in investing in high-tech projects.
For every A$1 worth of private investment attracted by the special IIF funds, the government usually will invest A$2; however that ratio is reduced for some of the funds, including the Rothschild fund.
The government money has not been given as a grant or a subsidy to the funds, but as a seed investment - which the government, like any other private investor, expects to get back, plus profit. Under the IIF rules, profits are shared between the private and government investors in a way that is advantageous to the private investors.
Geoffrey Brooke, director of Rothschild Australia's bioscience unit, said the unit was able to attract A$15 million from private investors, including the Tertiary Education Superannuation Scheme (university pension funds), the Australian pharmaceutical company CSL Ltd. and Rothschild itself.
With the government providing another A$27.5 million, Rothschild would have A$42.5 million, of which about half would go into biotechnology projects and the other half into other forms of bioscience, including agribusiness, food technology and environmental projects.
Brooke said he was “surprised“ by the number of projects that are now looking for investment in Australia.
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He said Australian scientists, after seeing their counterparts overseas become involved in commercial projects, are beginning to appreciate the possibilities of commercializing their work.
His unit now is looking at a number of projects and is close to an agreement to support two initially, but Brooke was not yet prepared to disclose the names of the projects.
Of the other three fund managers chosen by IIF in the first round of funding (more IIF money will be allocated later in the year), Amwin Management also is considering investing in biotechnology projects.
Michael Hillsden, CEO of Amwin, said his fund would be a general one but would invest in biotech projects that meet the fund's criteria, including high export potential and market readiness.
However, Amwin has not yet worked out any overall strategy for the fund, such as what proportion of its resources will be invested in any field. *