Divergent Capital

Monday, 8 January 2007

Divergent Achieves Strong Cash Exit of Visean

Divergent Capital Partners (“Divergent”), an Australian venture capital manager based in Sydney, today announced a successful exit from its portfolio company Visean Information Services (“Visean”). The sale is a strong validation of Divergent’s vision to be a leading provider of ‘pre-VC’ funding to innovative Australian technology ventures.

Visean is a data management software vendor in the global upstream oil & gas industry and has been a Divergent investee since 2001. It has been acquired by Weatherford International (“Weatherford”) for an undisclosed amount although Divergent confirmed that it generated a total IRR of 46% on its stake which was Divergent’s largest investment to date and had a holding period of five years. Divergent’s proceeds from this single exit have recouped the majority of their total portfolio outlay and provide the platform for an excellent overall return as the remaining portfolio of 14 other investments moves into a harvest cycle. Also noteworthy is the demonstration of a successful VC investment and model from the Australian market given the high profile and investment dollars directed to private equity and other asset classes in recent times.

The Visean relationship is a classic case study of Divergent’s investment model and philosophy in which they take significant minority equity positions and provides entrepreneurs with active, high-value support.

When Ian Johnston and Matt Connolly first approached Divergent 5 years ago they didn’t have a cent of revenue. However they had years of experience working on oil rigs, solid management credentials, and an idea to revolutionise the way mission critical information was collected and distributed from oil rigs.

Divergent backed them and their start-up venture to bring to market a system that significantly increased efficiency in offshore drilling projects thereby saving oil exploration companies hundreds of thousands of dollars (in some cases millions) per project. After developing a prototype application they had a tough time even convincing oil companies to take a free trial. However early clients quickly became ‘converts’ to their system and the business proposition took off.

Visean grew exponentially through both direct sales and the establishment of key distribution alliances. It established a beach-head presence in Houston to be at the epicentre of this global industry. In 2006, after exploring potential for an IPO on the LSE Alternative Investment Market, Visean’s strategic partner Weatherford approached the company for a full acquisition. Visean’s software was a perfect fit into their company-wide data management strategy and they wanted to position it at the hub of their real-time information capability. Weatherford (NYSE: WFT) is a US$15 billion oil field services company who had the capacity for an acquisition and could leverage Visean’s software to capture extensive synergy benefits.

“Visean is poised to expand its position in the industry through the roll-out of additional leading edge products and a greater distribution capacity. Weatherford is a natural long-term owner of the asset and being part of Weatherford will allow Visean to achieve its goal even faster,” added David Nelson, Chairman of Visean and Managing Director of Divergent Capital. “We are thrilled to have been part of turning an Australian technology start-up into an international high impact company.”

About Divergent Capital Partners: Divergent Capital Partners, based in Sydney Australia, invests primarily in early stage Australian companies within the Software and Internet sectors of the IT industry. The company was established in 1999 and currently has approximately $10 million of capital under management. Divergent identifies companies that are capable of global success in their respective industries. Most Divergent companies pursue niche opportunities within a global market and many of Divergent’s portfolio companies have established strong export sales around the world. In some cases, company headquarters have relocated to the U.S. to take advantage of market locale, entrepreneurial leadership talent, expansion, and exit opportunities.