Private Equity Group Completes First Investment

Private Equity Group Completes First Investment

Kinfolk Group Makes First Private Equity Investment Acquiring 33.3% of CMS Alphatech Limited

A group of SME owner-managers who created their own private equity group – Kinfolk Capital Limited (“Kinfolk”) have completed their first investment, purchasing a stake in a New Zealand business that is a sector leader in the Australasian healthcare market.

To carry out the investment, Kinfolk’s shareholders formed an investment syndicate specific for the transaction which included six other individuals, including corporate CEO’s, an M&A veteran and a senior partner in a leading law firm. 

The group has acquired a stake in CMS Alphatech Limited, an Australasian market leader in the marketing, sales, service and support of software and equipment used in the treatment of cancer. 

Kinfolk’s Managing Director Ross McConnell will be actively involved in the business, working closely with the founder who remains the majority shareholder.

Kinfolk formed in 2011 after a number of its members took part in The ICEHOUSE’s 18th Owner Manager Programme.  After completing the programme they decided to put their combined 500+ years of business experience to good use by investing into other owner-managed businesses. 

Kinfolk Capital director Mark Lewis, founder of Hire-a-Hubby and City Motor Group, credits The ICEHOUSE experience as a key driver behind Kinfolk’s establishment. 

“There was an essential link missing for many of the companies involved in the programme.  People were keen to expand, to grow exports or in some cases to step away from the day-to-day management of the companies they had built – but there was a need to secure capital to do these things that was not being met,” he says.

Kinfolk meets this need by connecting Kiwi firms with investors who have the capital, capability, and desire to help them grow. 

Ross McConnell says New Zealand has many small and medium sized enterprises with world-class potential. 

“We are focusing on mature firms led by passionate owners who have carved out their own profitable niche through years of innovation and hard graft.  These ‘hidden gems’ in the NZ economy are often prevented from achieving their potential by a lack of access to capital and capability, or perhaps more accurately by a lack of investors who will buy-in to their long-term vision.”

Phil Dixon, Owner-Manager of Sabato and part of Kinfolk’s leadership group says securing the group’s first investment hasn’t been an easy road. 

“Now that we’ve put in the hard yards and made this breakthrough, we feel very positive about the unique contribution we can make to the New Zealand private equity community,” he says.

McConnell says Kinfolk’s approach has become increasingly focussed on the incumbent owner-manager and the outcomes that they want to achieve for themselves and for the future of their business. 

“PE transactions typically do not put enough emphasis on the importance of these outcomes.  As owner-managers ourselves - that’s a situation we are uniquely qualified to address.”

“A key part of the value we offer is the ability to tap into 500+ years of collective business ownership and management experience contained within the investment group,” he says.

McConnell says Kinfolk will partner with incumbent owners who want to see their business achieve its full potential.

“This way we can preserve the core of what has made the business successful to date, while stimulating new progress and growth through the introduction of new shareholder capabilities and relationships.” 

“It also gives incumbent owners the opportunity to release a chunk of capital and step away from the front-lines if they want to, while retaining a significant personal and financial interest in the future success of their business,” he says.

Kinfolk raises capital for investments on a ‘deal-by-deal’ basis, allowing investors to retain personal discretion about whether to support each transaction.  This means it can make longer-term commitments to its investments than is usually possible for limited-life PE Funds.

For its second investment Kinfolk aims to expand its investor base to include more successful business owners and entrepreneurial professionals.

ENDS 

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