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Total NZ Investment Activity Exceeds NZ$1b

Total NZ Investment Activity Exceeds NZ$1b For First Time In A Decade

The New Zealand Private Equity and Venture Capital Monitor, released today, highlights an increase in total activity in 2016 for both the private equity and venture capital markets.

• Total investment and divestment activity across all investment stages increased significantly from NZ$494.4m in 2015 to NZ$1,557m.
• Total buy-out investment increased to NZ$1,005.6m from nil in the previous two years.
• The average deal value at NZ$18.2m was also significantly greater than the average of NZ$4.0m in 2015.

EY partner Brad Wheeler, stated that ‘The high level of buy-out activity was influenced by five transactions completed by Australian and global funds. While mid-market deal activity (both investments and divestments) was down on recent years, this in part reflects the successful growth of historical mid-market investments which have subsequently exited in the higher value buy-out category. These liquidity events continue to build on the successful track record of local mid-market funds.’

Large buy-out activity in 2016 included: Pacific Equity Partners’ acquisition of Waterman Capital investee Academic Colleges Group; Blackstone group made two large scale investments in New Zealand companies, Partners Life Limited and Arena Living; US based Advent International acquired resin manufacturer Nuplex Industries; and Archer Capital acquired New Zealand Pharmaceuticals from Direct Capital.
Mid-market deals in 2016 included Waterman Capital’s investment in My Food Bag, Maui Capital’s investment in Pedersen Group and Pencarrow Private Equity’s investment in MMC.
Matt Riley, chair of NZVCA says, ‘The outlook for the New Zealand PE and VC market remains optimistic in the short-term but somewhat subdued further out due to expectations of more moderate economic growth. Over NZ$1b of new capital was raised in 2016 across a broad range of investment stages from angel funds and Series A investment, to expansion and mid-market buyouts. The challenge for fund managers will be deployment of this capital in a competitive market meaning managers and investors alike may need to exercise patience in the ensuing search for value.’

Colin McKinnon NZVCA executive director says, `There have been years when activity has fluctuated with the ebb and flow of large international transactions. But increasingly we are seeing more New Zealand participation in larger transactions. International investment builds stronger New Zealand based companies and integrates Kiwi companies into international markets. Whether it is syndicated venture capital investment in early stage companies or accelerating the growth of more mature companies, the capital and skills of managers have delivered material benefits to New Zealand entrepreneurs who are the ‘engine’ of our economy.
‘Private capital is a significant contributor to the New Zealand capital market eco-system. Private equity and venture capital fund managers provide more than capital — they are strong long-term partners for growth companies.’


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