GNZS becomes cornerstone investor of fund providing capital to New Zealand businesses
Auckland (1 May 2009) – The Guardians of New Zealand Superannuation have today confirmed that they have committed up to $50 million to become the cornerstone investor in the Direct Capital IV Fund (the Fund).
The Fund is managed by Direct Capital and is its fourth private equity fund to be raised since its establishment in 1994. The Fund will invest in mid-sized private New Zealand companies that typically require further capital to continue growing their business, expand into Australia, or to assist with ownership succession.
The chief executive officer of the Guardians, Adrian Orr, said the Guardians had been actively seeking high-quality opportunities to invest in New Zealand. “We are pleased to be announcing this investment which will help us with our purpose, to assist future Governments to meet the future costs of New Zealanders’ superannuation.”
“We are also pleased that in serving that purpose we can assist New Zealand businesses to recapitalise and expand. This was an excellent opportunity. Direct Capital has an established and experienced team, they have a proven track record of adding value and generating good returns for investors,” Mr Orr said.
“We are very pleased to have the Guardians as our cornerstone investor,” said Ross George, managing director of Direct Capital. “Through the Fund the Guardians will be able to utilise their long-term investment horizon and patient capital to play a direct role in assisting New Zealand Inc. to grow.”
Direct Capital IV will be investing over the next 5 years and the Guardians’ commitment will be drawn down over that period.
The Guardians already have significant investments in New Zealand, with some 18% of their portfolio invested in New Zealand equities, infrastructure, property, timber, other private equity and fixed income. These include an existing investment with Direct Capital in the Direct Capital III Fund and another with the AMP-Pencarrow Private Equity Fund, with a similar mandate relating to expansion capital and management buy-outs.
“We will continue to consider opportunities of appropriate quality and scale, arising from the private or public sector, alongside good partners and built on long-term relationships,” said Mr Orr. “In particular, in private markets, infrastructure, recapitalization and expansion capital.”
For more information please contact:
Paul Gregory, Head of Communications
[email protected], 09 308 2041, 021 274 9994
Ross George, Managing Director, Direct Capital Limited.
[email protected] capital.co.nz, 021 644 644, 09 307-2562
About the New Zealand Superannuation Fund:
The New Zealand Superannuation Fund, which commenced investing at the end of September 2003, is designed to partially provide for the future cost of New Zealand superannuation. An ageing population means the cost of providing New Zealand superannuation is expected to double over the next 50 years. To prepare for this, the Government is allocating on average NZ$2 billion a year to the Fund over the next 20 years while the cost of superannuation is relatively low. In the meantime, the Fund will invest the money on a prudent but commercial basis.
As the cost of superannuation escalates, the Government will progressively draw on the Fund to help smooth the impact on its finances. As at 31 March 2009 the value of the Fund was NZ$11.5 billion. The Fund is expected to grow to around NZ$109 billion by 2025. For more information visit www.nzsuperfund.co.nz
About Direct Capital
Direct Capital was established in 1994 by Ross George, Bill Kermode and Mark Hutton and today continues to be owned by its executives. Direct Capital has raised more than $600 million from institutional investors over 15 years, providing those investors a mechanism for investing in what is New Zealand’s largest equity market, the private company market Investments include successful companies such as New Zealand King Salmon, Ryman Healthcare, EFT-POS New Zealand, Airwork, EziBuy, Max Fashions, Go Bus, Innovair, Paper Coaters, New Zealand Pharmaceuticals, and Express Logistics.