The NZ Superannuation Fund (NZS) has called into question the viability of the government-owned venture investment outfit unless it receives more state capital.
In written post-hearing replies to queries raised in the regular parliamentary grilling of the sovereign wealth fund, the NZS noted that its 2023 ‘conviction review’ of NZ Growth Capital Partners (NZGCP) raised concerns about the sustainability of the group’s core multi-manager investment project, Elevate.
“The 2023 review downgraded NZGCP’s viability from green to amber, due to the current uncertainty as to whether the government will provide further funding for Elevate,” the NZS reply to parliamentary questions says. “The Elevate Fund is not yet self-sustaining, and without further funding may fail to meet its statutory objectives, which could in turn result in departures of key personnel.”
NZGCP, headed by former Financial Markets Authority chief, Rob Everett, has received $300 million from the government, mostly diverted from NZS contributions, since inception in 2020.
The NZS has oversight of Elevate, which in turn is responsible for selecting external venture managers and encouraging co-investment in underlying local companies.
As at July last year Elevate reached its goal of aggregating $1 billion of investments in NZ growth companies, comprising $223 million of government money and a further $750 million plus top-up from nine third-party managers.
The NZS rated Elevate ‘green’ on the traffic light scale for the other seven factors considered in the review.
“Elevate’s viability score will be reconsidered in light of its funding situation and any market impact when the next conviction review is carried out at the end of the current financial year, or before then if necessary,” the NZS reply says.
The NZS also told parliament its own statutory five-yearly review was underway (conducted by Willis Towers Watson) while noting the fund was $30 billion behind original forecast due to the eight-year contribution hiatus starting in 2007.
“In 2003, the Fund was expected to be worth $100 billion by 2023…,” the NZS reply says. “At 31 December 2023 the Fund was worth some $70 billion; Treasury’s current forecasts are that it will be worth $100 billion in 2030.”
Last week parliament also kicked off the second reading of the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill – legislation designed to give the NZS powers to take outright control of companies.
The draft law entered the house in March 2023.