New Zealand PE exits increase ten-fold

The total value of private equity investments in New Zealand remained constant at NZ$178m in 2009, while the value of divestments increased ten-fold to $332m.

New Zealand saw NZ$177.6 million (€94.2 million; $126.5 million) invested in the country across 108 transactions in 2009. The total value of investments was almost identical to the NZ$178 million worth of transactions recorded in 2008, but the number of investments increased by 32 percent.
However, New Zealand witnessed a spike in the total value of divestments in 2009, according to a study released by Ernst & Young and the New Zealand Private Equity and Venture Capital Association (NZVCA). The value of divestments increased ten-fold from NZ$46.5 million in 2008, although the number of divestments declined by 27 percent to eight. 
Of the 108 transactions completed in 2009, 86 percent were venture investments, 11 percent mid-market transactions and the remainder large buyout transactions. There were no top-end deals completed in the preceding year. Of the three large deals in 2009, two had disclosed values totaling NZ$62.7 million while Anchorage Capital Partners’ acquisition of the New Zealand operations of Burger King was not included in the total deal value as it was for an undisclosed price. 
“Large top-end deals remain quiet, although 2009 saw two follow-on investments. This is to be expected given the reluctance of the financial institutions to provide support to leveraged deals,” Andrew Taylor, partner at Ernst & Young, said in a statement. 
He added that the mid-market segment is one to watch. “While overall investment levels have remained stable, with recently completed successful capital raising by a number of private equity firms we can expect to see some solid mid-market investment activity over the next few years,” he added. 
Ninety three percent of respondents to an accompanying survey were either optimistic or neutral about the outlook of the private equity industry in the next six months, as compared to 46 percent in 2008. 
“We would like to see new funds emerging at the venture capital stage, and more large institutions – like the pension funds – following the example of the New Zealand Superannuation Fund and allocating investment capital to private equity,” Franceska Banga, the NZVCA chair, said in a statement.
With so many companies in the country under private ownership, private equity is a crucial source of capital, she added. 
The survey was based on responses from 19 venture capital and private equity investors in the New Zealand market, including firms from both New Zealand and Australia.