New Zealand's Direct Capital closes Fund V at $270m

The vehicle received NZ$90 million from New Zealand Superannuation Fund (NZ Super) late last year and is said to have achieved its target corpus within two months. According to local media, Direct's existing LPs account for the bulk of the corpus, including the government’s Accident Compensation Corporation and pension fund Annuitas.

The private equity firm typically invests NZ$15-60 million per deal in New Zealand or Australian businesses, emphasizing succession transactions or management buyouts. The new vehicle will focus on private mid-cap companies seeking to fund growth through expansion into overseas markets.

“The success we have had to date, both for our investors and for the companies in which we have invested, demonstrates the considerable potential that exists among companies of this type,” Ross George, Direct’s managing director, said in a statement.

The close brings total fundraising to about NZ$1.2 billion since the firm’s establishment in 1994. Fund IV was launched in 2008 and closed in 2010 at NZ$325 million with support from NZ Super and Pohutukawa Management.

Recent portfolio activity includes the exit of a significant minority interest in New Zealand King Salmon as part of an Australian IPO, while Phitek Systems - an audio equipment company backed by Direct’s TMT Ventures fund - was sold last month to a US strategic buyer for NZ$60 million.

In aggregate, the companies backed by Direct’s third and fourth funds are estimated to have increased their revenue from around NZ$1 billion to more than NZ$1.5 billion while marking a 42% increase in employees.  

New Zealand has more than 33,800 mid-cap businesses representing 29% of total sales and 33% of employment nationally. About 5,000 of these are expected to be put up for sale within the next five years.

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• Topics
• Australasia
• Fundraising
• Buyout
• Growth
• GPs
• New Zealand
• Direct Capital