Direct Capital, ACC back New Zealand logistics player

This is the first investment from Direct Capital’s sixth fund, which has raised NZ$425 million ($278 million) since launching in February with commitments from ACC, NZ Super Fund, Pohutukawa Fund, and Annuitas, a pension fund.

Established in 1989, Mondiale provides freight forwarding, logistics, and warehousing services for international customers with a focus on Asia. The company is said to be the largest privately-owned freight forwarder in the country, with overseas offices in Australia, China, and the Philippines. It expects to use the latest investment to expand its international footprint.

Direct Capital claims to be the largest PE firm in New Zealand with some NZ$1.7 billion raised to date. Its fifth buyout fund closed at NZ$375 million in 2017, also with support from ACC. Fund V has been fully invested across eight companies, including engineering consultancy Beca Group, retirement village operator Qestral Corporation, apparel supplier AS Colour, and financial services company Perpetual Guardian.

Fund VI will follow a similar strategy to its predecessors, investing NZ$15-60 million per deal in Australasian businesses with annual revenues of more than NZ$50 million that are looking to expand internationally. Direct Capital expects deployment in the context of COVID-19 to be largely characterized by a growing wariness for carrying debt. It estimates that during the next 3-5 years, companies will increasingly seek out equity to fund growth, despite currently low interest rates.

“Too much debt, and it begins to drive business decisions that are usually short term in nature and negative for creating long term growth and value,” Heath Kerr, a director at Direct Capital, said in a statement. “We see a big move to business owners wanting to reduce risk and be better positioned to act on growth opportunities when they arise. Bringing in a partner such as Direct Capital, reducing debt and providing the capital that can enable growth, is a great way of achieving that.”

ACC is arguably the largest institutional investor in New Zealand and a mainstay of the local private equity market. Alternatives represent about 4% of its NZ$40 billion in assets under management, with private equity activity split evenly between fund commitments and direct investments in dollar terms. Check sizes for direct deals can be as large as NZ$50 million and there is a reluctance to take controlling stakes.

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• Topics
• Australasia
• Expansion
• Fundraising
• Support services
• Buyout
• New Zealand
• Direct Capital
• Accident Compensation Corporation (ACC)
• Logistics