Wellington-based investment house, Booster, has flagged the launch of a new fund targeting “early stage” NZ companies.
The Booster Innovation Fund (BIF), slated for a June roll-out, will invest “indirectly in unlisted shares in early stage companies founded on New Zealand developed intellectual property”, according to disclosure documents.
While details of the new fund remain under wraps, the disclosure material says the “underlying investment vehicle of the BIF was established in 2018 and has a limited performance and investment history”.
Booster partnered with the Victoria University of Wellington start-up hub (UniVentures) in 2018 to fund promising new businesses, extending the agreement to the University of Otago last year. As at August 2020, the NZ Innovation Booster (NZIB) vehicle, which includes contributions from its KiwiSaver schemes, had placed about $6 million in eight start-ups hatched in academia out of a total funding target of $10 million.
The BIF could see more Booster funds tipped into the local venture capital realm.
Allan Yeo, Booster managing director, said the BIF would have a wider mandate than the university-based start-up scheme (which is structured as a limited partnership) with the ability to invest in later-stage companies.
“It’s the next evolution of the NZIB,” Yeo said. “It’s not quite there yet but we’ve already seen a lot of really interesting investment ideas.”
BIF performance fees would represent an estimated 0.005 per cent of Booster funds that invest into the vehicle, the disclosure says, assuming the manager retains 20 per cent of the profits on selling any underlying assets.
Booster has ramped up exposure to unlisted assets in recent years including through the Tahi Fund – which invests in small to medium sized New Zealand companies – and through the Private Land and Property Portfolio.
The $3 billion plus manager launched the property fund in 2019, initially to hold land previously bundled up in horticultural businesses held via the Tahi fund.
At the time, David Beattie, Booster principal, said: “We think we can provide better risk-return opportunities by unbundling the land and wine-making assets.”
Beattie is not directly involved in the BIF but he said Booster continued to explore alternative investment approaches.
“I’m working on property and private credit opportunities,” he said, as well as exploring retirement income solutions.
Booster is one of handful of managers offering private equity assets in a KiwiSaver scheme, with an allocation to the Tahi and property funds. Other schemes including Mercer, Simplicity, Pathfinder and Kiwi Wealth have also weighed into private equity in various strategies.
Earlier this month, for example, Kiwi Wealth tipped in $50 million into the $300 million Pioneer Capital Partners IV fund just months after making a similar-sized allocation to a Movac private equity vehicle.
In a statement, Kiwi Wealth chief investment officer, Simon O’Grady, said the Pioneer Capital deal “represents another step in Kiwi Wealth’s burgeoning series of private equity investments”.
“Pioneer Capital sits attractively in the mid-stage between start-ups and the mature end of the market, focusing on expansion capital for high-value export enterprises with established operating bases – in particular, health and wellness, premium food and beverage, and technology-enabled businesses,” O’Grady said.
Founded in 2005, Pioneer has invested in 23 NZ businesses to date through various funds that have attracted many local institutional investors including the NZ Superannuation Fund (NZS). The NZS has committed $100 million to the latest Pioneer fund with Ngāi Tahu Holdings contributing a further $30 million to the pot.
Randal Barrett, Pioneer managing director, said the new fund had “a strong pipeline of new opportunities and expect to make the first couple of investments into high-value-export-focused companies inside a year”.
“And, as an open-ended fund, we can take a long-term view with these and additional investments,” Barrett said in a release.
NZS also oversees the government-owned venture capital fund-of-funds vehicle, Elevate. Seeded with $300 million, including $240 million diverted from NZS, NZ Growth Capital Partners (previously known as NZ Venture Investment Fund) had allocated over $70 million to three managers – Blackbird NZ ($22.75 million), Movac Fund 5 ($30 million), and Pacific Channel Fund 2 (a conditional allocation of $20 million) – as at this March.