Direct Capital raises NZ$200m for Fund IV

The New Zealand-focused firm needs to raise NZ$50m more to reach its final close target.

Auckland-headquartered Direct Capital has raised NZ$201.5 million ($130 million; €93 million) for Direct Capital IV as it moves closer to its final target of NZ$250 million.

The fundraising success “is a huge endorsement of the private company market in New Zealand”, Ross George, a managing director at the firm, said in a statement.

The capital raised has come mainly from returning investors in Direct Capital III, which closed on NZ$130 million in 2005, the firm said. It added that on average, returning investors have increased their commitments to the current fund by a factor of 2.3 times.

In March, the firm raised NZ$82.5 million for Pohutukawa Private Equity II, an unlisted public fund raised from retail investors. That fund was targeting commitments of NZ$60 million. Pohutukawa II allows retail investors to invest alongside institutional investors in Direct Capital IV.

Pohutukawa II will invest alongside Direct Capital IV on a pro-rata basis, Gavin Lonergan, an investment director at the firm, said in an interview at the time.

Fund IV will invest in private companies valued at between NZ$25 million and NZ$150 million. It will make

The private company market is New Zealand's largest equity market, being five to seven times larger than the NZSX for example, and represents more than a third of the economy.

Ross George

growth capital, pre-IPO and buyout investments, typically writing equity cheques of between NZ$10 million and NZ$45 million.

“The private company market is New Zealand’s largest equity market, being five to seven times larger than the NZSX for example, and represents more than a third of the economy”, George said. Investing in the growth of these unlisted companies “does more for improving New Zealand’s economic performance than any other single initiative”, George added.

Investors in Direct Capital IV include New Zealand Superannuation Fund, Accident Compensation Commission, other pension funds and community trusts.

Direct Capital now manages assets of more than NZ$640 million across seven funds and it has invested more than NZ$375 million in 60 companies since its inception in 1994.