April 2005

March was a busy and excellent month for the New Zealand venture capital and private equity industry.

It was great to see a new NZ$150m investment fund launched with inventages venture capital Inc. joining leading New Zealand private equity and venture capital investor Direct Capital and Crown Research Institute AgResearch to form BioPacificVentures. BioPacificVentures will invest in a range of food and agriculture businesses in Australasia from start up businesses through to private investment in public equities.

International food group Nestle has taken a significant investment in the fund and Wrightson is the biggest local investor in the fund which had its first close during March at NZ$100m.

During the month ANZ Private Equity (ANZPE) announced that its ANZ Investment Bank parent has injected another A$100 million into the division, increasing its Australia and New Zealand mid-market portfolio limit to A$250 million. The parent will no doubt be pleased then with ANZPE’s announcement last week that it had sold its shares in Pacific Print Group realising 4.3 times its original investment of NZ$3m and generating an IRR of 78.6 per cent.!

On 23 March the NZ Super Fund announced plans relating to its allocation of funds to New Zealand private equity and to alternative assets generally (discussed in more detail below).

While it is early days in terms of determining what the overall impact of this will be on the industry, the initial step is a very positive and welcome development and we also acknowledge the efforts of the NZ Super Fund team in expediting the private equity allocation decision making process.

Please note that the full 2004 industry results from the NZ Venture Capital Monitor survey will now be published in late April and so look out for those.

Information on all of the above deals and developments (and more) can be found in the News section of the NZVCA website (www.nzvca.co.nz)

On 23 March 2005 the NZ Super Fund announced the appointment of Quentin Ayers Pty Ltd, a specialist alternative assets advisory firm based in Sydney, to review investment opportunities in the New Zealand private equity market.

Provided that appropriate opportunities are available, the Fund intends to invest up to NZ$100 million into New Zealand based private equity funds over the next 3 to 5 years.

The Fund also announced an increase in weighting to alternative assets (including private equity) from 7 per cent. to 20 per cent. of funds by June 2007 and then building to 35 per cent. of the total fund thereafter.

It is great to see these initial plans for NZ Super Fund allocations to New Zealand private equity. The announcement represents an important milestone in terms of what we hope will become, in time, significant ongoing investment into the venture capital and private equity asset class by New Zealand and offshore institutional investors.

Two key Angel investment events were also held during March and both were great successes and bode well for the development of the Angel market in NZ. Bell Gully’s “Halo’s for Hire” forum was attended by an enthusiastic crowd of around 65 people and Incubators NZ’s “Power of Angel Investment” forum series attracted 60 people in Christchurch, Wellington and Auckland.

There is a huge amount going on in this area in NZ at present, including the creation of a steering group to assist with the direction of the industry. Here are some key contact details if you would like to learn more about these developments or connect with any of the key people/organisations:

New Zealand Angels Steering Group – Tim Robertson – info@escalator.co.nz

Auckland – Cory Williams, CEO of ICE Angels – CoryWilliams@xtra.co.nz

Wellington – Stephen Underwood, Chair WIN Angels – Stephen@Renouf.co.nz

Christchurch - Chris Hyland – Canterbury Investor Network – chris.hyland@cdc.org.nz

Angels Generally – Andrew Hamilton, Chair Incubators New Zealand – info@incubators.org.nz

Bell Gully – Wayne Hudson – wayne.hudson@bellgully.com

We welcome the following new members:

Rangatira Ltd – Full member

Intellectual Capital Partners Ltd – Full member

Carter Holt Harvey - New Ventures – Full member

de Geest Ventures Ltd - Full member

Westpac Banking Corporation - Associate Member

Russell McVeagh - Associate member

The Biocommerce Centre Ltd - Incubator member

Ice Angels - Angel member

Wayne Williams - Individual member

Jim McElwain - Individual member

Martyn Levy - Individual member

As we mentioned in the last newsletter, Jenny Morel from No 8 Ventures was invited to attend the Australia New Zealand Leaders Forum in Melbourne recently to represent venture capital and private equity. Jenny has now written a paper on the trans-Tasman venture capital market and what we need to have for a single market. Please contact Christopher Twiss at the NZVCA if you would like to a copy of this and if anyone would like to help with further work on this subject, they should e-mail Jenny at:

jenny@no8ventures.co.nz

Regards,

Chris Twiss
ex NZVCA