New Zealand Superannuation Fund, New Zealand’s sovereign wealth fund (SWF), has divested its interests in three offshore private equity (PE) funds with, with the consideration and buyer kept confidential.
The sales was reported by New Zealand publication Scoop News. Based on figures from its website, the NZ Super Fund claims to maintains a capitalisation of assets under management (AUM) worth NZ$29.6 billion (US$20.35 billion), with a rate of return per annum after costs and before taxes of 9.44 per cent, as of 31 March 2016.
The fund maintains engages 40 external fund managers, though they have ended four engagements since July 2015, include three announce on 19 April 2016 and added two new external fund managers. It maintains an operating model based on a commitment to active investment management, with the aim of optimising returns and establishing an agile, scalable operations.
Recently, the fund has been said to be shifting towards a more concentrated investment portfolio where it will adopt an activist investor approach. It is also reducing the number of external manager and adviser relationships, preferring deeper relationships and adopting more of a partnership approach.
The first fund that saw a divestment was Hellman & Friedman VII, which targets investments in the media, financial services, professional services, and software and information services verticals in developed markets,
The other two funds are JMI Equity Fund VII, which targets US-based investments in the software and internet, business services and healthcare IT sectors, and HIG Bayside Loan Opportunities Fund II. This fund specifically targets stressed and distressed senior debt obligations in US and European small-cap companies. No sales involved New Zealand assets.
According to Fiona Mackenzie, Head of Investments at NZ Super Fund, the investments were amongst their smaller interests, accounting for 0.3 per cent of overall fund size as of June 2015. Mackenzie commented: “The move to sell them is consistent with our strategy to have fewer, deeper relationships with our investment managers. It is also pleasing to be able to realise gains from a part of the fund’s portfolio that has performed strongly in recent years.”
In a separate development, the sale comes as the NZ Super Fund is acquiring 25 per cent of banking services provider Kiwibank Limited, a wholly-owned subsidiary of state-owned enterprise New Zealand Post Limited, in a deal valuing Kiwibank at NZ$1.1 billion. This deal also sees the Accident Compensation Corporation (ACC) purchasing a 20 per cent of Kiwibank alongside NZ Super Fund.