The Global from Day One (GD1) Fund II has raised NZ$38 million – NZ$5 million more than its first close target.
The New Zealand Venture Investment Fund (NZVIF) is a cornerstone investor in the fund, committing around NZ$11 million (US$7.5m), alongside its Taiwan counterpart, the National Development Fund. The remainder has been raised from foundation investor Sparkbox Investments, the Fund’s management team and private investors in New Zealand, Taiwan, Australia, Singapore, Hong Kong, and the USA. New Zealand investors include Sir Stephen Tindall’s K1W1, Diligent founder Brian Henry, and a range of private investors with technology and finance backgrounds.
GD1 Fund II is a cross-border technology-focused fund with the majority of capital to be invested into New Zealand and Taiwanese start-ups with a focus on the US and Asian markets.
GD1’s Chintaka Ranatunga said that raising capital for VC funds is always a challenge so it was very pleasing to exceed the target.
“Investors are showing faith in our proposition, which is to target early stage software companies needing investment of between $500,000 and $2.5 million at the Pre Series A and Series A stages. We are typically investing into companies which already have revenues of $1 to $3 million, customers in offshore markets, and a clear global competitive advantage.
“We are seeing a strong pipeline of companies to look at with impressive revenue and customer traction, and a global outlook.”
The Fund has completed its first investment, into sales automation SaaS startup Qotient. Qotient, co-founded by Justin Wright and serial entrepreneur Miles Valentine (founder of Zeacom), has offices and customers in Auckland, Sydney and San Francisco.
NZVIF Investment Director Aaron Tregaskis said the successful fund-raising demonstrated the growing appetite in New Zealand for investment into young technology companies.
“Venture capital investment is at healthy levels but we always need new funds coming into the market to continue and build on the momentum which has been achieved. GD1 is occupying a niche in between where the angel market invests and where other VC funds target slightly larger investments.
“We now have three New Zealand-based funds actively investing with a fourth raising capital commitments, so the VC sector should be in reasonable shape for the next few years.”
GD1 Fund II is currently open for investment until final close later this year.
NZVIF: David Lewis, m: 021 976 119, email@example.com
GD1 Fund II: Micaela Lewenz, m: 021 251 9007, firstname.lastname@example.org
The New Zealand Private Equity and Venture Capital Monitor, released today, highlighted an increase of investment in 2015 for both private equity and venture capital markets. Mid-market investment increased to NZ$284.1m from NZ$243.5m in 2014. The average deal value at NZ$16.7m was greater than the average of NZ$12.8m in 2014. The increase in investment activity was coupled with continued strength in divestment as the portfolio companies of domestic funds sought investors for future growth.
Brad Wheeler, partner EY says ‘Venture and early stage funds invested NZ$62.5m across 69 transactions, continuing momentum from the last three years. IT and software has continued to be the dominant sector for venture activity continuing the trend of the last three years. Health and Biosciences remain at historical low levels reflecting the challenges of long lead-times and large capital requirements for innovation commercialisation.
‘The high level of mid-market activity included a mix of investment themes from international fund managers active in turnaround and secondary acquisitions from New Zealand owners. While new public listings were quiet in 2015 the market for private transactions was resilient with New Zealand owners and management wanting to see those businesses taken to their next stage.’
Total activity (investment and divestment) across all private equity and venture capital was NZ$494.4m, down from $919.5m in 2014, mainly due to there being no large buy-out deals. Large buy-out activity in 2014 was mainly driven by Pacific Equity Partners’ divestment of Griffin Foods to URC (Philippines). Total investment value was NZ$346.6m spread across 86 deals, while total divestment was lower at NZ$147.8m in 2015, down from NZ$620.3m in 2014.
Deals in 2015 included the acquisition of Manuka Health by Pacific Equity Partners, Tembusu Partners’ investment in CricHQ, Pencarrow’s investment in Icebreaker, Allegro Private Equity’s acquisition of Carpet Court and Archer Capital’s acquisition of the Aspire2 Group.
Matt Riley, chair of NZVCA says, ‘The outlook for the New Zealand PE and VC market remains positive. 2015 proved to be a successful year for mid-market divestments. This is a success oriented industry where the durability of the fund managers is wholly dependent on performance. There were no new funds raised in 2015 as managers continued building portfolios and other managers were returning capital from successful divestments. Several fund managers have announced intentions to raise new funds in 2016.’
Wheeler added, ‘For the year ahead, the PE and VC fund managers outlook remains positive, with some optimism generated by the emergence of new investor groups. EY’s latest Capital Confidence Barometer indicates a strong acquisition appetite globally with companies combining strategic M&A and cooperative alliances to navigate a complex and disruptive business landscape.’
Colin McKinnon NZVCA executive director says, `The strength of the mid-market continued in 2015. New Zealand privately owned businesses with private equity shareholders were able to execute growth aspirations by introducing new shareholders with capital and skills. Some of the new shareholders brought international capability to the New Zealand company growth trajectory.
‘Private markets and privately-owned companies continue to dominate the New Zealand business landscape. New investors have been able to access private markets through community and retirement savings platforms.
‘Kiwi founders and owners demonstrate innovation and determination that can be coupled with private capital to accelerate growth. More businesses growing makes a difference to New Zealand’s economic prospects.’
Colin McKinnon 0276406406 email@example.com
Brad Wheeler 0212285490 firstname.lastname@example.org
About the New Zealand Private Equity & Venture Capital Association
The NZVCA is a not-for-profit industry body committed to developing the Venture Capital and Private Equity industry in New Zealand. Its core objectives include the promotion of the industry and the asset class on both a domestic and international basis and working to create a world-class Venture Capital and Private Equity environment. Members include Venture Capital and Private Equity investors, financial organisations, professional advisors, academic organisations and government and quasi- government agencies.
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
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Though merger and acquisition activity this year might not reach the highs seen in 2015, Simpson Grierson partner Michael Pollard remains positive about the market.
“We are starting to see a steady deal flow. Last year was a standout, yet this year’s deal flow is still reasonable. Unless there’s some kind of adverse event, I’d expect to see a solid, busy year in 2016,” he says.
The year got off to a slow start, but then so did 2015. That’s not unusual in New Zealand where there is a pronounced break in deal activity during the summer months.
A new regulatory environment and a wave of new listings, kick-started by the Government’s share offer programme and growing KiwiSaver funds, were heralded as the catalyst for the revitalisation of New Zealand’s sharemarket.
Three years after Mighty River Power’s NZX listing, and five years since the Financial Markets Authority was established, it’s a fitting time to assess how effective this programme of change has been and what challenges lie ahead.
Richard Dellabarca, a former investment banker and technology company executive, has been appointed as the new chief executive of the Crown-owned New Zealand Venture Investment Fund.
NZVIF chairman Murray Gribben said Mr Dellabarca brings a wide range of capital markets and technology company experience to the role vacated by departing CEO Franceska Banga.
“NZVIF has made significant progress in working alongside the private sector to develop the venture capital and angel investing markets in New Zealand over the last 15 years. It has a portfolio of over 200 companies, including some of New Zealand’s most prominent technology companies.