Venture Investment Fund Board Appointments
Sunday 29 July 2001
The Government has appointed a
six-member advisory board for the new $100 million New
Zealand Venture Investment Fund.
The fund, launched in the Budget, is a key measure amongst the Government's initiatives to stimulate business growth and transform the New Zealand economy.
"The VIF is a bold initiative to accelerate the development of New Zealand's venture capital sector, which is vital to the formation of innovative new businesses," said Research, Science and Technology Minister Pete Hodgson. "This money will back New Zealand's innovators in universities, Crown Research Institutes and the private sector.
"The advisory board will provide the commercial knowledge and judgement the fund needs to drive up seed and start-up investment activity. Its expertise will be crucial in the establishment phase of VIF, when we will be seeking private sector partners for a series of 'drop-down' investment funds."
The chair of the advisory board will be John Grant, currently executive chairman of Australian investment company Grantham Capital. Mr Grant has 20 years experience in private equity investing in Australia and internationally and is a former committee chairman of Australia's Industry Research and Development Board.
Mr
Grant is joined on the board by:
Peter Taylor,
company director and chair of a HortResearch/Enza joint
venture company and Gas Investments (NZ) Ltd;
John Hindmarsh, Treasurer, Auckland City
Council;
June McCabe, chief manager,
WestpacTrust;
Geoff Page, chief executive,
Industrial Research Ltd;
Grant Ryan, manager
NBCi New Zealand Ltd;
Dr James Buwalda, chief
executive of the Ministry of Research, Science and
Technology, (ex officio member).
The $100 million in NZVIF will be invested in a number of individual funds over the next two to three years, with each fund operated by professional venture capital fund managers contracted by the board. Managers will be sought from the venture fund management industry in New Zealand and internationally through a request for proposal (RFP) process.
Mr Hodgson said the advisory board's expertise would be called on in defining the conditions of the RFP, assessing proposals, negotiating the conditions for VIF investment in individual funds, making judgements about when to set up individual funds and balancing the government's risk across the portfolio of VIF funds.
"The advisory board balances internatioinal venture capital expertise with good governance skills and technical capability from New Zealand's innovation sector," Mr Hodgson said. "I am confident it can successfully guide the VIF in its mission to accelerate the formation of a thriving venture capital sector in this country."
New Zealand Venture
Investment Fund
Advisory Board Profiles
John
Grant
Chairman
Background
John Grant has 20 years
of successful experience in private equity investing in
Australia and internationally and is experienced in active
participation at Board-level in public companies and
statutory authorities.
John is Executive Chairman of
Grantham Capital, an investment company, which he
established in 1981 to invest in and provide advice to
high-potential, innovative Australian businesses. Through
Grantham Capital in 1984, he jointly founded, with Hambros
Plc the UK based international merchant banking and
investment group, a venture capital investment management
firm, Hambro-Grantham Limited. John was appointed
Hambro-Grantham Managing Director and CEO and in 1994
assumed the additional role of Executive Chairman. John
ceased his executive involvement in the firm in 2000 when
the company became a wholly-owned subsidiary of the
Commonwealth Bank of Australia, following the sale of
Grantham Capital's fifty percent shareholding.
John’s
previous experience of twelve years in investment banking
included six years as Managing Director and CEO of
International Pacific Corporation (now Rothschild
Australia). His earlier business experience was in
management consulting and public accounting.
John is a
Chartered Accountant and holds a Master of Business
Administration degree from Columbia University, New
York.
Other Government appointments
John was a member
and Committee Chairman of the Commonwealth of Australia's
Industry Research and Development Board (a statutory
authority providing grant funds to promising Australian
technology companies). He has served as a member of two
Australian Government Committees of Review and was a member
of the steering committee of the Australian Government
sponsored Innovation Summit.
Private sector
appointments
John is non-executive Chairman of H-G
Capital Limited and a non-executive Director of Goodman
Fielder Limited, John Swire & Sons Pty. Ltd, Vision Systems
Limited, Mincom Limited and H-G Ventures Limited. He was
previously a Director of Perpetual Trustees Australia
Limited.
Peter Taylor
Board
Member
Background
Peter Taylor has over 30 years
business management and restructuring experience. He has
worked at Board level in large corporates, as well as
maintaining a hands-on involvement in small to medium sized
businesses.
He is a past managing partner of the
Wellington office and a past member of the National Board of
Ernst & Young. Over the period of 1984-1991 he led the
Ernst & Young Wellington office corporate recovery and
reconstruction practice and was national leader of the
practice over the period 1987-1991. He retired from the
partnership in December 1998 to become a self-employed
Consultant and Company Director.
Prior to joining Ernst &
Young, Peter was Group Development Manager with Cable Price
Downer Limited. Prior to this, he had been a partner with
KPMG in Africa.
Peter is qualified as a Chartered
Accountant and completed the Executive Program, 1993, at the
Coalgate Darden Graduate School of Business Administration,
University of Virginia.
Government appointments
Peter
is Chairman of the “Modernisation” Board – Public Trust and
is a member of the Commerce Commission. He was Chief
Executive for CCMAU from June 1994-October 1996. He
previously was a Director for PowerDesignBuild Limited, a
subsidiary of ECNZ Limited.
Peter is also a Director of
Hortresearch New Zealand Limited
Private sector
appointments
Peter is on the following
Boards:
Chairman - Hortresearch/ENZA Joint
Venture Company
Chairman – Gas Investments (NZ)
Ltd
Director – D.F. Mainland Group
Trustee - Totally Wellington Trust
Director –
Isaac Construction Limited
Director – CanMap
Hawley Limited
He also has had previous Directorships
with Ernst & Young, Turners and Growers Limited, MAS
Technology Limited, and until recently was Chairman of
Trustees for the Dame Malvina Major Foundation
John
Hindmarsh
Board Member
Background
John Hindmarsh
has extensive experience in the New Zealand capital market.
He has arranged funding for businesses both large and small
including the New Zealand Dairy Group, New Zealand Apple &
Pear Marketing Board, ANZ Banking Group (New Zealand) Ltd,
and the Auckland City Council.
John’s career highlights
include being appointed an advisor to Fletcher Building on
the formation and operation of its venture capital company
Inventure Limited.
In 1994, John was invited to teach a
paper entitled “Finance for New Ventures” to adult students
enrolled in the University of Auckland Diploma Programme.
That course has evolved into a short course entitled “New
Venture Financing Proposals” now offered as part of the
University’s Executive Programmes.
John has an MBA degree
from Auckland University that included a dissertation on the
venture capital process.
June McCabe
Board
Member
Background
June McCabe is Chief Manager,
responsible for WestpacTrust’s Government Business
operations and Corporate Strategy. She has particular
accountabilities for Crown Transaction Banking and for
providing the Chief Executive with strategic advice on the
financial services industry.
Prior to becoming Chief
Manager, WestpacTrust, she was the CEO and a Director of
Mortgage Corporation New Zealand Limited and was accountable
to the Board for overseeing the operation of a mortgage
portfolio with an approximate value of $700m.
Ms McCabe’s
previous roles include:
Executive Director of
Mortgage Services Ltd, accountable for the establishment of
the company
CEO of The Home Mortgage Company
Ltd, accountable to the Board for overseeing performance of
a $700m portfolio of mortgage assets,
Rental
Manager, Housing New Zealand accountable for the region’s
rental operations
Branch Manager, Housing
Corporation of NZ, whereby successfully completing sale of
$500m prime rate mortgage portfolio.
Ms McCabe has also
provided consultancy services to the State Services
Commission for the appointment of State Sector Executives
and Director-General positions.
Government
appointments
Ms McCabe is a Director of the ACC and was a
member of the Prime Minister’s Enterprise Council. She has
held Directorships for Housing New Zealand, Department of
Corrections Assurance Board, was Chairperson of the Maori
Economic Development Commission, and was a working committee
member for the Select Committee on Child Support Legislation
Review (1994)
Private Sector appointments
Ms McCabe is
currently a Trustee for General Church Trust. Past
Directorships include Mortgage Services Limited, Mortgage
Corporation of New Zealand Limited, and Moana Pacific
Fisheries Limited. Ms McCabe was the Chairperson of the
Maori Multiple Owned Land Development Committee and a member
of the Maori Directors Group.
Geoffrey Page
Board
Member
Background
Geoff Page is CEO of the
Government-owned Industrial Research Ltd, a group of
companies operating in New Zealand, Australia and Singapore.
As a senior executive with 12 years experience in his
current role and as CEO for the New Zealand Dairy Research
Institute, Geoff has led the development of world class
research groups, initiating new areas while establishing and
maintaining international governmental and private
organisational relationships.
During his career he has
been involved in creating 18 companies and joint ventures
and established numerous licensees. He has been keynote
speaker at numerous national and international
conferences.
Geoff has been a Senior Lecturer in Food
Technology at Massey University and has led and managed
multi-disciplinary food technology projects for Unilever in
the Netherlands and the United Kingdom. Geoff has worked
internationally as a scientist at a number of major
organisations including Schering Corporation.
Geoff has a
PhD from the Imperial College of Science and Technology,
London. In 2001, he was elected an Honorary Fellow of the
Institute of Professional Engineers of New Zealand (IPENZ).
Geoff was also awarded a DSc. (Honor causa) by Massey
University this year.
Government appointments
Geoff
has had a wide range of experience as a member of many
statutory organisations. He is currently Chair of the
Industrial Research Ltd subsidiary Materials Performance
Technologies Pty Ltd and Board Member of a number of joint
ventures including: Superlink Developments Ltd, Gracelinc
Ltd and Damping Systems Ltd. He is also a Board member of
Telarc Ltd, a council member of the Testing Laboratory
Registration Council and Member of the Association of Crown
Research Institutes.
Grant Ryan
Board
Member
Background
Grant Ryan is Manager, NBCi New
Zealand. Grant is the originator of the internet search
technology that lead to the formation of GlobalBrain Ltd in
March 1998 which was then purchased by NBCi (backed by
General Electric) in May 2000.
Prior to establishing
GlobalBrain, Grant worked for two and a half years as a
scientist for Industrial Research Limited.
He has been
involved in numerous international research projects
including one at the Université de Versailles in Paris on an
EC research project modelling pollution flows in European
economise. He has also led research into impediments to the
uptake of new and emerging technologies.
Grant has a
Degree in Mechanical Engineering from the University of
Canterbury and PhD in Chemical and Process
Engineering.
Government appointments
Grant was on the
expert advisory panel that helped allocate money for the
Incubator Development Programme run by the Ministry of
Economic Development in June 2000).
Private sector
appointments.
Grant has been a Director of GlobalBrain
Ltd (NZ Company), GlobalBrain.net (US company),and Boulevard
Web Systems (Christchurch based software company).
James
Buwalda
Board Member
CE, Ministry of Research Science
and Technology
James Buwalda is Chief Executive of the
Ministry of Research, Science and Technology (MoRST). James
took up that position in 1996 and leads a team of about 50
advisors and support staff with the aim of advancing the
benefits of research and innovation in New Zealand.
He
has a background in agricultural and horticultural
research.
Since joining the Ministry, he has overseen the
Foresight Project and introduction of new evaluation
methodologies, and in more recent years, become dedicated to
stimulating the growth of high technology companies in
NZ.
James Buwalda will serve as an ex-officio member of
the NZVIF Advisory Board.
New Zealand
Venture
Investment Fund
An introduction to the New Zealand
Venture Investment Fund
"VIF is a bold initiative to
accelerate the development
of New Zealand's venture
capital sector, which is
vital to the formation of
innovative new businesses,"
Pete Hodgson
Minister of
Research, Science and Technology
The New Zealand Venture
Investment Fund (VIF) was launched by Government on 24 May
2001 to accelerate the development of the venture capital
market in New Zealand. Through VIF, the Government will
invest NZ$100 million over the next three years in
innovative New Zealand businesses developing technology and
high value-added products and services.
The New Zealand
Venture Investment Fund will invest its capital through a
series of individual investment funds. These individual
funds will be operated by private sector fund managers and
will include private-sector venture capital as well as the
Government's investment contribution.
These individual
funds will, in turn, invest in New Zealand businesses.
Individual funds will typically be about NZ$30-NZ$50 million
in size and will have a focus on seed and start-up
investments in New Zealand's high-tech and innovative
industries.
The individual funds will be for:
seed stage investment which is funding that enables
development, testing and preparation of a product or service
for commencement of business operations; and,
start-up investment which is funding to enable business
operations to begin.
The purpose of VIF
The purpose of
VIF is to encourage more New Zealand businesses on paths to
global success by increasing their access to international
experts, networks and market knowledge.
VIF will do this
by helping to accelerate the development of the
venture-capital industry in New Zealand that will, in turn,
increase the level of seed and start-up investment activity
in the New Zealand market.
It's intended that VIF will
help to commercialise the innovations from Crown Research
Institutes, Universities and the private sector.
It's
also intended that VIF will encourage the development of a
larger pool of people in New Zealand's venture capital
market with skills and expertise in seed and start-up
investment.
How VIF will work
"The Government
understands that funding for basic research
underpins
New Zealand's innovation system as a whole.
VIF will
improve the commercialisation of ideas, continued
support for basic research will keep the ideas
flowing."
Pete Hodgson
Minister of Research, Science
and Technology
VIF will invest NZ$100 million in about
five individual investment funds. The first individual
investment fund is expected to be operating by the end of
2001 and the rest will be established over the next two to
three years.
VIF will contract with professional venture
capital fund managers to operate the individual investment
funds. The individual funds will be about NZ$30-NZ$50
million in size and will operate for seven to 10 years
before they terminate and the profits are distributed among
investors. An individual investment fund is likely to
invest in 15-20 New Zealand enterprises over its lifetime
and be actively involved in eight to 10 companies at any one
time.
VIF operating principles
VIF will
invest in individual funds under conditions that are
attractive to private sector co-investors.
The
activities of VIF should accelerate market development
without crowding out existing venture operators or
distorting market operations.
The operation of
VIF will complement, and be coordinated with, other
government, industry and regional development initiatives.
How VIF will invest its funds
VIF will be a minority
investor in the individual investment funds. VIF will
normally invest up to one third of the total capital raised
for each fund. The rest of the capital will come from
private sector investors. It will be the responsibility of
the individual fund managers to secure the private sector
capital.
VIF will invest in funds that are
fixed-duration (closed end), private-equity investment
vehicles.
VIF will normally invest up to one
third of the total capital raised for a fund.
VIF will invest in funds that are of up to $50 million in
total size.
VIF will give co-investors the right
to exercise an option at any stage up to the mid-point of
the fund to buy out VIF's investment based on a formula that
refunds VIF's capital plus interest.
VIF's share
of the proceeds of a fund at termination will be determined
by a formula that refunds VIF's capital plus
interest.
Investment charter
Each individual
investment fund will be governed by an investment charter
that will specify how an individual fund's capital will be
invested.
The criteria that will govern the sorts of
businesses individual funds will invest in are:
New Zealand businesses.
The VIF will invest in funds
whose investment charters specify that they will make
initial capital investments in New Zealand businesses, with
these defined as businesses that have the majority of their
assets and employees in New Zealand at the time initial
investments are made.
Stage of business
development..
Fund investment charters must specify that
initial investments will be made in seed-stage and start-up
businesses.
Limitation on size of total
investment in individual businesses.
Fund investment
charters must limit the size of the total investment in
individual companies to no more that 15 per cent of the
total capital in the fund.
Investment exclusions
Fund
investment charters must exclude investment in the following
classes of businesses:
property development,
retailing,
mining,
hospitality-industry businesses,
re-investing
and re-lending,
businesses associated directly
with other investors in the
fund or directly
with the fund managers.
How investment will be
returned
VIF will give co-investors in the individual
investment funds the right to buy out its investment at any
stage up to the mid-point in the life of a fund. All
investors, both New Zealand and foreign, will have access to
this incentive. An early buy-out option for private sector
investors will be based on a formula that refunds VIF's
capital and interest only. Interest will be based on an
applicable Government bond rate.
Precise formulae will
be determined by negotiation with each fund manager and will
be included in the investment charter for each fund.
If
VIF has not been bought out before the mid-point of the term
of a fund, it will take a pro-rata share of the net proceeds
of the individual funds (including losses, if these have
occurred) in the same manner as all other investors when the
fund terminates.
If you are an investor and would like
more information about the NZ Venture Investment Fund please
contact the VIF Establishment Unit at contactus@nzvif.com.
If you want more information about investment opportunities
in New Zealand, please go to the Investment New Zealand web
site at www.investnewzealand.govt.nz.
Structure and
operation of VIF
""Our aim is to increase the level of
seed and start-up investment activity
in the New Zealand
venture capital market, following a strategy
used
successfully by countries such as Israel and
Singapore."
Pete Hodgson
Minister of Research, Science
and Technology
As the New Zealand Government's venture
capital fund, VIF will be responsible for meeting
Government's goals to accelerate the development of the
venture-capital industry in New Zealand. VIF will be set up
as a distinct entity, administered by the Ministry of
Research, Science and Technology under the operation of a
General Manager with oversight from an Advisory Board drawn
from the private sector. Work is already underway to
establish VIF, which is expected to be operational by the
end of August 2001.
VIF responsibilities
It will be
VIF's responsibility to:
seek and appoint fund managers
to operate the individual investment funds
negotiate specific conditions that will govern the way VIF
invests in the individual funds
make judgements
about when to set up or exit funds
assess the
investment charters of the individual funds
balance the government's investment across the portfolio of
funds
monitor the performance of fund managers
report to government on the performance and
progress of individual funds.
VIF Advisory Board
The
VIF Advisory Board will provide the commercial knowledge and
judgement VIF requires to operate successfully. The Advisory
Board's expertise will be particularly crucial during the
set up phase when VIF will be seeking private sector
partners to manage the individual investment funds.
The
Advisory Board will provide particular expertise
in:
defining the conditions of the Request for
Proposals from private sector fund managers to manage the
initial individual investment funds
assessing
the proposals from prospective fund managers
selecting fund managers
negotiating specific
conditions governing VIF investments in funds
making judgements about when to set up further
funds
balancing the government's risk across the
portfolio of funds.
Government expects to announce the
membership of the Advisory Board sometime in late
July.
VIF design consultation
VIF was designed after
consultation with international specialists, in
particular:
Australian venture capitalists and
Federal Government policy makers.
Dr Yigal
Erlich (Managing Director of the Israeli Yozma Fund) who
provided advice to the Minister of Research Science &
Technology and government officials in March
2001.
New Zealand fund managers and investors at
a series of meetings during Dr Erlich's visit and through a
discussion paper on design options.
Singaporean
venture capitalists and government officials during a visit
of a delegation from that country in April 2001.
USA-based venture capitalists and New Zealand investors
working in the USA market.
How to get involved
VIF will
contract with professional venture capital fund managers to
operate about five individual investment funds. These funds
will be set up over the next two to three years. Managers
will be sought from the venture fund management industry
within New Zealand and internationally and will be selected
through a Request for Proposal (RFP) process.
Selecting
Fund Managers
Fund managers will be selected primarily on
commercial merit judged by their ability to:
raise private sector investment funds for the individual
funds; and
previous success in the management of
venture-capital funds.
Those fund managers will then seek
private sector investors to co-invest in each fund with VIF.
Once the individual funds are established, fund managers
will be seeking innovative New Zealand enterprises to invest
with.
Request for Proposals and Expressions of
Interest
A Request for Proposals (RFP) to manage the
first VIF individual investment fund will be released in
late August 2001. The VIF Establishment Unit is seeking
expressions of interest from venture capital fund managers
to participate in the RFP. If you are interested in
receiving a copy of the RFP document, Please register with
the VIF Establishment Unit at contactus@nzvif.com. The RFP
document will also be posted on the Venture Investment Fund
website www.nzvif.com in late August 2001.
The final
word
“While there is risk involved in venture capital
investment, international experience also shows that there
are gains to be made. That is why private sector investors
have joined with government schemes in Australia, Canada,
Singapore and Israel to jointly invest in seed capital and
start up investments in high tech industries. Through VIF
the New Zealand Government is seeking to develop the New
Zealand venture capital market with private sector
co-investors and improve the skills on the ground required
to take New Zealand companies into global markets.
“New
Zealanders are bursting with bright ideas with great
business potential. We aim to turn these ideas and
innovations into business successes.”
Pete
Hodgson
Minister of Research, Science and Technology