The $3 billion Wellington-based financial services firm, Booster, is close to sealing a couple of new private equity deals as it surpasses $100 million of investment in local small-to-medium (SME) business ventures.
Allan Yeo, Booster founder and managing director, said the group was in negotiations with a specialist manufacturing firm and a kiwifruit business to add to its current private equity wine and avocado assets.
Since launching the private equity fund, under the Tahi brand, two years ago, Booster has sunk about $100 million – sourced from the group’s KiwiSaver and other investment funds – in four wineries and an avocado farm.
In July, the four wineries will be formally consolidated under the Booster Wine Group partnership enabling the business to “extract synergies”, Yeo said.
“We’re not shutting anything down and there’s no job losses,” he said. “It’s more about helping the businesses do the things they specialise in, better.”
For example, the four wine brands could share marketing costs and rationalise production methods, Yeo said.
Collectively, the Booster wine businesses had “crushed 100,000 tonnes of grapes and produced 900,000 cases of wine”.
Earlier this year Booster launched an unlisted property fund to house the land assets acquired in the private equity deals while Tahi holds the underlying businesses.
Yeo said the separation enabled investors to access the different return profiles of property and business assets depending on their risk preferences.
Booster plans to allocate between 5-10 per cent of its KiwiSaver scheme and other funds to the private equity venture, indicating the manager has ongoing capacity to invest in the NZ small business sector.
And Yeo said the fact a relatively small investor like Booster can invest $100 million in NZ companies over just two years showed there was huge demand – and opportunity – in the local SME private equity space.
“The NZ smaller companies sector is crying out for capital and we haven’t had any trouble finding opportunities – $100 million in only a tiny drop in the ocean,” Yeo said. “Our strategy is to find companies operating in sectors where NZ should have a competitive edge.”
He said while a range of new government initiatives – such as the just-announced $300 million venture fund and the Shane Jones-driven $3 billion Provincial Growth Fund – and private offers (including the Simplicity deal with Icehouse Ventures) were welcome, “execution is important”.
“Government involvement is necessary,” Yeo said. “But it’s important it doesn’t over-promise and under-deliver or New Zealanders might lose confidence in the strategy.”