Direct Capital launches Direct Capital IV

Direct Capital today announced the launch of its latest private equity fund, Direct Capital IV.  The fund is raising $250 million from institutional investors and will include capital raised from Pohutukawa II, launched today by ABN AMRO Craigs.  Pohutukawa was established to provide a vehicle for retail investors to invest in private equity.

Direct Capital has been at the forefront of the private equity industry in New Zealand, investing more than $375 million into 60 companies since 1994, including well-recognised names such as Ryman Healthcare, Blue Star and EziBuy, and more recently, New Zealand King Salmon, Max Fashions and GoBus. 

Direct Capital IV will invest in mid-sized private companies that typically require further capital to continue growing their business, expand into Australia, or release capital for their owner, an investment theme Direct Capital has followed since it began fifteen years ago.    

Direct Capital IV will continue to invest in what Ross George, managing director of Direct Capital describes as ‘New Zealand Inc”.   

“The private market in New Zealand is substantially larger than the listed equities market and more representative of the economy,” commented Mr George.  “For example, of the Deloitte Top 200 companies, 80% of them are unlisted.  In the mid-market sector that we invest in, there are an estimated 1,500 companies with annual revenues exceeding $25 million.  Each of those companies will have growth or succession plans requiring capital.”      

“Direct Capital IV will be investing over the next 1-3 years, a period we believe will offer very good opportunities as companies seek to reduce debt and move back to a more traditional equity base for funding growth and making acquisitions.” 

“It’s a reality of this economic environment that well funded companies with strong balance sheets will do well in what is going to be a tough period generally.”

“The Direct Capital team has been together 15 years now.  We have invested through multiple economic cycles, our investment approach is well tested and we have achieved outstanding returns for our investors.”           

Today’s headlines are very focused on the immediate consequences of the credit crisis and the shift in funding from debt to equity.  Direct Capital IV is being launched to continue what is now a well established equity investment model in New Zealand for investors and business owners.