May 2008

The last couple of months have just flown by and so we are playing catch-up a little in terms of industry news for 2008. We cover the appointment of the new NZVCA Executive Director, the release of 2007 New Zealand VC and PE industry data, the enactment of the Limited Partnership Act, an investment pitching opportunity for NZ companies in Pasadena, USA and some interesting data on NZ’s Angel investment market released by NZVIF just last week.

In recent deal news, Endeavour Capital announced in mid-April that it had invested a million dollars into WaikatoLink spinout Khipu Systems Ltd and in March Auckland based Angel investment group ICE Angels invested $1.7m into Mobile Mentor (Mobile Phone Services) and $250,000 into Black-Hawk (Tracking Systems).

On 11 April the NZVCA announced that the appointment of a new Executive Director, Colin McKinnon. Colin, currently a Chief Advisor at the Ministry of Economic Development, brings considerable experience to the table and will add real value to the NZVCA as the private capital industry moves into the next stage of its development. Colin will start at the NZVCA on 19 May 2008 and he can be contacted at colin.mckinnon@nzvca.co.nz or Mob: 027 640 6406. Colin’s biography is also set out below.

Finally, further details will follow later in the year but for now please mark your diaries for the 7th Annual NZ Private Equity & Venture Capital Association Conference - our flagship NZ private equity, venture capital and Angel investment industry event - which will be held in Auckland on Thursday 6 November 2008.

Colin was appointed Chief Advisor in the Ministry of Economic Development in March 2003. His current role has been with the Firm Capability Group within the Industry & Regional Development Branch which is focussed on enabling firms to innovate and become globally competitive.

The work of the Branch seeks to foster an environment in which businesses are able to respond effectively to the changing global market place and grasp opportunities to maximise growth and lift productivity. The Branch advises Ministers on what actions can best support firms in internationalising and innovating.

Colin has a special interest in the “access to finance” issues for fast-growth businesses and the commercialisation process within the innovation system. Current focus is on development of a vibrant early stage venture capital industry for New Zealand. The $40 million Seed Co-investment Fund programme and the $160 million Venture Investment Fund programme aim to catalyse the development of early stage equity markets in New Zealand.

Prior to joining the MED Colin was the Head of Commercial Cards for National Australia Bank based in Melbourne. This strategic leadership role included the development and marketing of internet-based transaction management tools for business and government.

His previous experience includes senior roles in corporate and investment banking with Bank of New Zealand, auditing in the airline industry and a period as an Economist with the Ministry of Transport.

It is great to see the realisation of multiple private and public sector efforts in the arrival of the Limited Partnership Act which was enacted last Friday (2 May).

The NZVCA has played a pivotal role in the process of lobbying for, and developing, this legislation. On behalf of the Association we would like to thank the many NZVCA members who have contributed an immense amount to this initiative over the last 5 years. This is a really outstanding example of what an industry body such as the NZVCA can achieve through the collective efforts of its members.

The Act provides New Zealand with an internationally recognised regime for investment and will definitely assist New Zealand in the running for international capital – vital for the development of our private equity and venture capital industries.

For more information on the Limited Partnership Act visit www.limitedpartnerships.govt.nz

An invitation to attend a New Zealand Technology "Fast Pitch" Conference taking place at the Business Technology Center in Altadena, California on Tuesday, 3 June 2008 from 10:00 am - 3:00 pm. The New Zealand Government’s investment agency, Investment New Zealand, together with the NZVCA, the Pasadena Angels, and the Business Technology Center will host the event.

Any New Zealand technology firm wishing to make a short presentation on the investment opportunity in relation to their firm must complete the attached form. The audience will include potential Angel & VC investors and technology industry professionals.

In Angel investment data released by NZVIF last week Palmerston North, Dunedin and Auckland emerge as New Zealand’s ‘angel investing’ powerhouses. A copy of the Press Release relating to this data is attached below.

And the most recent “Young Company Finance” (YCF) newsletter (which tracks nationwide seed and early-stage company investment activity) was also released last week. Copies can be accessed from the “News and Publications” section of the NZVIF website (www.nzvif.com).

If you would like to be added to the e-mail distribution list for future YCF newsletters then please e-mail Ruth Malo at NZVIF (ruth.malo@nzvif.com) to request this.

We welcome the following new members who have joined recently

Central Capital Management Ltd – Full (Private Equity fund)

Cure Kids Ventures – Angel

On 2 April a great crowd of over 120 NZVCA members gathered at Ernst & Young for the release of the 2007 NZ Private Equity & Venture Capital Monitor Survey.

Results from the 2007 New Zealand Private Equity & Venture Capital Monitor show a steady development of the New Zealand private capital market:

NZD$1.2bn total invested across 85 deals matched record year in 2006 ($1.2bn across 112 deals). This represents 7.2% of total M&A in New Zealand, up from 6.1% in 2006 and 2.2% in 2005.

Venture Capital investment grew by 8% to $82m with 60 deals completed ($76m across 77 deals in 2006). Average deal size of $1.3m in 2007 is up 35% on 2006 ($1.0m).

Private equity mid-market investment grew by 114% to a record high of $205m across 23 deals ($85m across 18 deals in 2006). Average deal size of $8.9m in 2007 is up 89% on 2006 ($4.7m).

$270m of divestments across 8 deals, up 21% in value from 2006 ($223m across 11 deals) reflecting further maturing of the use of private equity.

A record start to 2007 saw $1.1bn invested across 41 deals in the first six months. This cooled slightly in the second half with $99m invested across 44 deals indicating a slow down in the large (LBO) market with no reported investment activity in this sector for the second half of 2007.

A full copy of the 2007 Monitor survey can be found in special “VC& PE Monitor” section of the NZVCA website.

Take me to the 2007 survey

Further details will follow later in the year but for now please mark your diaries for our flagship NZ private capital industry event which will be held in Auckland on Thursday 6 November 2008.

Colin McKinnon
NZVCA