LONDON INVESTMENT FIRM SETS UP EQUITY FUND IN TONGA

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NUKU´ALOFA, Tonga (Matangi Tonga, Jan. 29, 2008) - An equity fund agency in Nuku´alofa is being established by the Kula Fund II, a pool of multi-million capital funds. The Kula Fund II was established in 2006 to provide Private Equity for small to medium business in the Pacific Islands

Andrew Crompton from Aureos Capital of Brisbane, Queensland, Australia, the company that is responsible for the managing of Kula II, told a meeting at the Dr. Moulton Hall that under Kula II Private Equity risk capital investment ranged from US$100,000 million to US$3 million.

He said that Private Equity "is a medium to long-term risk capital provided in return for an equity stake in potentially high growth unquoted companies."

For a local business to have access to Kula II, Andrew said that the beginning is the presentation of a business plan to their agent in Nuku´alofa or directly to him in Brisbane.

"A business plan would explain the goals and visions of your business. How you will spend borrowed or invested money. How this will benefit lenders and /or investors.

Andrew said that it is usually takes three to six months from when a business plan is presented to when an investor actually invests in a local business.

An investor could take a significant minority equity stake, board representation, minority protections and preferred exit. The investment can take various forms, but the objective is to maximize the redeemable portion of the investment, so as to reduce the reliance on exit.

Exit strategy is developed in conjunction with the sponsor prior to the investment. Past exits have come from sale back to sponsor or company, trade sale and public listing.

"Typically we are looking to exit within three to six years."

The Nuku´alofa agency will be located at the Pacific Management Consultancy, Kupu House, Hala Fatafehi.

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