New Zealand's Pencarrow closes Fund VI on $187m
New Zealand-based Pencarrow Private Equity has closed its sixth fund at the hard cap of NZD 300m (USD 187m), having scaled up from NZD 250m in the previous vintage.
The final close came in December 2022, Nigel Bingham, the firm’s managing partner, told Mergermarket, AVCJ’s sister title. A debut investment from the new fund – in Shoof, a distributor of on-farm and veterinary products – is expected to close later this month, he added.
LPs include a US family office, but most of the investors are New Zealand-based.
Pencarrow first secured US family office support for Fund V, which closed in 2018. This vehicle was raised without the support of long-time backer New Zealand Superannuation Fund. Instead, the GP rallied an increasingly PE-friendly community of foundations, community trusts, and indigenous Maori financiers known as iwi groups. These investors contributed 40% of the corpus.
Founded in 1993, Pencarrow has invested more than NZD 600m of equity in mid-sized New Zealand businesses to date. Fund V built on the momentum of its predecessor, which amassed NZD 204m in 2013 and followed up with a NZD 80m annex in 2016.
The strategy for Fund VI is largely unchanged. The firm targets companies with enterprise values of NZD 20m-NZD 100m, typically through management buyouts, succession deals, and growth capital investments. Value-add initiatives often include international expansion
Bingham said the firm has a strong pipeline of potential opportunities being presented and is “attracted to non-cyclical assets, regardless of economic cycles.” Deals tend to take longer to complete in the current environment because price expectations need to adjust, he added.
Fund VI is now fully realised following exits from the likes of retirement village operator BeGroup and solar power provider SolarZero in 2022. It also sold fund administrator MMC, which was part of the annex portfolio.
Fund V portfolio companies include The Interiors Group, a home interiors retailer previously owned by Australia-based Allegro Funds. This was one of a spate of sponsor-to-sponsor transactions in Asia towards the end of 2021. Allegro previously stated that international trade buyers were interested, but travel restrictions prevented them performing on-site diligence.
Around the same time, Pencarrow formed Pacific Clinical Research Network by acquiring two separate clinical trials businesses – Lakeland Clinical Trials and Southern Clinical Trials – and combining them into a single entity in which it holds a majority stake.
Fund V also features dermatological medical practice Skin Institute, frost protection solutions provider New Zealand Frost Fans, web application shielding and protection specialist RedShield, non-bank lender Avanti Finance, gourmet yogurt maker The Collective, and geological software company Seequent, according to its website.
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