Private Equity And Venture-backed Investment Record New Highs For NZ Activity

• Total investment and divestment activity across all investment stages increased to NZ$2.5b, from NZ$2.2b in 2019.
• Mid-market investment increased to NZ$736m from NZ$377m in 2019.
• The average investment transaction value for mid-market was NZ$21.6m, significantly increased from NZ$13.8m in 2019.
• Early-stage venture investment was NZ$127.2m across 92 transactions, an increase from NZ$112.2 across 46 transactions in 2019.

The New Zealand Private Capital Monitor produced by EY, was released today. It highlights a strong investment in New Zealand businesses in 2020.

Andrew Frankham, the chair of the New Zealand Private Capital said, “The Mid-Market sector continues to be a strong performer with more than $2.8b invested in the last decade and $1.0b returned to investors to date.”

Mid-market transactions in 2020 included investments by New Zealand domiciled funds including Direct Capital, Oriens Capital, Milford Private Equity, Pencarrow Private Equity and Waterman Capital.

EY partner Brad Wheeler, said “The outlook for the New Zealand private capital market is optimistic compared to 2019 due to the recovery from COVID-19 both in New Zealand and across the global economy. Private capital funds are well-placed to help accelerate the ambition of many NZ businesses.”

There is estimated to be more than $1.4b of capital available from domestic private equity and venture capital funds, providing alternatives for early-stage, mid-market and large private companies seeking new capital.

The early-stage venture market accelerated during 2020 with several new funds raised including Blackbird Ventures, Movac Fund 5 and Pacific Channel.

Buy-out private equity activity in 2020 included: EQT Infrastructure’s takeover of Metlifecare; and BGH Capital and Ontario Teachers Pension Plan’s takeover of Abano Healthcare.

Colin McKinnon New Zealand Private Capital executive director said, “The strong growth of mid-market investment activity included increased investment from local private equity funds and additional transactions by international funds including Australia.”

International investors have been mostly investing in IT and software companies. Funds from Australia and United States represented most of the international investments in NZ companies in 2020.

“The increase in early-stage venture investment activity is partly due to new funds being raised in this sector. We are gradually filling the Series A/B stage with capital seeking globally relevant companies”, said McKinnon.

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