NZ’s Pencarrow holds $177m one and done on fifth fund

Investors in the fund include the Accident Compensation Corporation and the Government Superannuation Fund Authority.

Wellington-based manager Pencarrow Private Equity has held a first and final close on its fifth mid-market fund on its NZ$250 million ($177 million; €145 million) hard-cap.

The firm held a final close on Pencarrow V at the end of March, after eight weeks on the fundraising trail, Nigel Bingham, managing partner at the firm told Private Equity International.

Pencarrow V, which had a NZ$200 million target, is more than double the size of firm’s previous largest fund, the 2011-vintage Pencarrow IV, which raised NZ$124 million. It is also the quickest fundraise for the firm; Fund IV was raised in over a year, Bingham said.

All but one of Fund V’s capital commitments have come from New Zealand-based LPs. “We got one small allocation from a US family office, but we managed to get a huge demand out of New Zealand. We did look to talk a few overseas LPs but the fact that the fundraise was so rapid meant it was hard for overseas LPs to get in there quickly.”

The New Zealand Superannuation Fund, which is an investor in the firm’s prior funds, did not back the firm’s latest fundraise. “NZ Super chose to cut fees on managers they’ve chosen to back and also restricted them in terms of investment criteria. We didn’t want to get lower fees or restrictions, so we chose not to go forward them and they chose not to go forward with us,” Bingham added.

Bingham added the Fund V had demand from existing LPs, many of who have upped their investments significantly. Accident Compensation Corporation and Government Superannuation Fund Authority are two LPs with significant commitments in the fund. The firm also received capital commitments from domestic foundations, community trusts as well as iwis (New Zealand’s indigenous population) and private investors.

The firm also put in a GP commitment in excess of NZ$3 million, above 1 percent of the capital raised, Bingham added.

The focus of the fund will remain the same despite the jump in fund size, investing between NZ$10 million and NZ$40 million in management buyouts, succession deals and expansion capital.

Fund V has already completed its first investment providing expansion capital to a company operating in the food and beverage segment.