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Direct Capital exits Transaction Services Group

New Zealand’s Direct Capital has sold its stake in TSG after five years during which the company trebled in size and expanded beyond Australasia.

New Zealand private equity firm Direct Capital has sold its shareholding in New Zealand based global payment provider Transaction Services Group (TSG) to US-based Calera Capital and TSG chairman Murray Bolton. TSG management is also re-investing in the company.

Direct Capital invested in TSG in 2010 and the company has more than trebled in size and expanded outside Australasia, Direct Capital director Tony Batterton said in a statement.

The exit to Calera Capital is “a logical next step for the business given TSG’s desire to build its business in the US and international markets and the attendant capital requirements,” he said.

Batterton told PEI that the company’s latest fund, Director Capital IV, is fully deployed but there is no fund raising on the horizon.

Direct Capital IV completed fund raising during 2009 collecting NZD $325 million ($211 million; €198 million) with the intention of investing into 12-15 companies over a five-year investment period.

There are 26 investors in Direct Capital IV including sovereign wealth funds, pension funds, community trusts, religious trusts and endowment funds, and the New Zealand Superannuation Fund.

Direct Capital targets Australian and New Zealand mid-market companies, typically investing NZD $15-60 million in companies with annual revenues of NZD $30-300 million and taking both minority and majority stakes.

Among Direct Capital’s investments is Cavalier Wool Holdings, New Zealand's largest wool scourer, which is to merge with the scouring subsidiaries of New Zealand Wool Services International.

Last year Direct Capital invested in Energyworks, New Zealand’s leading provider of mechanical maintenance and engineering services to clients across the oil and gas, power generation, and petrochemical industries.

Its active funds, Direct Capital III and Direct Capital IV have invested in 19 portfolio companies. The company has NZD $500 million under management.