Direct Capital has raised $200m for IV fund

The National Business Review - Friday June 26 2009

Private equity firm Direct Capital has raised $200 million of the $250m it is seeking for its new fund Direct Capital IV.

Direct Capital signalled its intention to raise the money last November and said some of it would come from Pohutukawa II, established by ABN Amro Craigs as a vehicle for retail investors to invest in private equity.

Definitions of private equity vary but the term generally applies to investments in companies that are not publicly traded.

Direct Capital said today that it was well on the way to the $250m total and the money raised so far had mainly come from existing investors in the Direct Capital III fund raised in 2005.

The capital raising was a huge endorsement of the private company market in New Zealand, said Direct Capital managing director Ross George.

"We've also had very good support from other pension funds and community trusts whose trustees and managers have seen very large swings in the value of their investment portfolios but are still required to fund members' pension benefits or continue making community grants," he said.

"Trustees want to reduce risk and return to normal, common sense investment," he said.

Direct Capital has invested more than $375m into 60 New Zealand companies since 1994, including EziBuy 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. Direct Capital was established in 1994 by Ross George, Bill Kermode and Mark Hutton.