New Zealand-based global investment fund the NZ Super Fund announced on December 19 that it will be investing up to $180 million (NZ$260 million) in domestic small-medium sized companies (SMCs) over the next five to 10 years.
NZ Super Fund has set three mandated targets ― to pre-fund universal superannuation in New Zealand, such as NZ$90 million in Direct Capital’s V Fund, NZ$120 million into Pioneer Capital’s III Fund, and up to NZ$50 million into Movac’s IV Fund.
Each fund is expected to invest in between eight and 15 individual companies. It is also seen to benefit different parts of the local private equity market, like direct capital operating at the larger end of the growth spectrum, pioneer targeting mid-market companies seeking international growth, and Movac focused on earlier stage, high growth technology companies.
NZ Super Fund chief investment officer Matt Whineray claims they have been investing in this sector since 2005, with previous investment types delivering net returns of about 15 per cent per annum.
“New Zealand continues to provides attractive investment opportunities in small to medium –sized companies which are high growth, typically internationally focused, and able to benefit from the expertise that these managers can provide,” Whineray said. “External managers are a logical and efficient way for the Fund to get access to the growth opportunities in this sector.”
Whineray added the NZ Super Fund’s in-house New Zealand investment team would continue to focus its efforts on listed equities and larger scale investments, about NZ$100 million or more, along with the fund’s rural and timber holdings.
As of November 30, the NZ Super Fund had NZ$4.9 billion invested locally, including more than $1 billion in the New Zealand share market, and large investments in Kaingaroa Timberlands, Datacom and Kiwibank. The Fund has returned 9.7 per ent per annum since inception in 2003.