NZ’s Pioneer Capital hits $180m target for Fund III

Almost half of the capital raised for Pioneer Capital Partners III came from the New Zealand Superannuation Fund.

Auckland-based mid-market firm Pioneer Capital Partners has wrapped up fundraising for its third fund, hitting its NZ$260 million ($180 million; €170 million) target after less than three months in market, Private Equity International has learned.

Pioneer Capital managing director Randal Barrett told PEI the firm was initially planning a ‘one and done’ for Pioneer Capital Partners III but decided to hold an initial close on NZ$210 million in end-February because its investment in Havelock North Fruit Company (now renamed Rockit Group) was nearing completion.

The firm launched its third growth equity focused vehicle in January this year. The New Zealand Superannuation Fund was the main financial backer, committing NZ$120 million or nearly half of the capital raised. Other limited partners in the fund include superannuation funds, Maori corporations, family offices, community organisations, religious and educational trusts, and the Pioneer management team.

“Private equity is becoming mainstream in New Zealand. There are six active domestic managers who have generally found it easy to raise capital from a wide range of investors in New Zealand. It’s actually been a very good fundraising period for this vintage,” Barrett said.

The fund is the firm’s largest and will follow the same investment strategy as its predecessor funds, investing between NZ$10 million to NZ$50 million in privately-owned, small- and medium-sized New Zealand businesses looking to grow internationally.

Its predecessor fund, 2013-vintage Pioneer Capital Partners II closed on NZ$150 million and attracted an additional NZ$50 million of LP co-investment. And 2007-vintage Pioneer Capital Partners I closed on NZ$66 million and attracted NZ$29 million of LP co-investment. Both funds are fully invested.

Barrett said the firm has already made its first investment from Fund III, acquiring a majority stake in apple company Rockit Group in February together with private equity firm Oriens Capital. He added that the firm is looking to invest in at least eight companies for Fund III.

“We’re seeing a very buoyant deal-making period over the next three years because of the number of funds that have been raised domestically,” Barrett said. “We are also getting a lot of inbound buyer enquiries particularly from South-East Asia and China.”

Pioneer Capital has invested in 17 businesses including health system software developer Orion Health, veterinary clinic Pet Doctors and brewery Moa Group, according to its website. Collectively, the firm’s portfolio companies employ over 4,000 people and have a total revenue of NZ$900 million per annum, of which over 95 percent is earned outside of New Zealand.