The revised NZ wealth visa has triggered a surge in offshore interest in local private equity offerings, according to Cultivate Ventures investment director, Marcus Henderson.
Henderson said the agricultural private equity specialist had seen a marked uptick in enquiries since the Active Investor Plus (AIP) visa revamp was announced in February.
Under the AIP changes that went live on April 1, the government relaxed some of the strict investment and residency conditions introduced in 2022 that had crushed the previously buoyant NZ wealth-linked visa trade.
Since the 2022 reforms that required most AIP applicants to invest directly in NZ businesses or from a small menu of local venture/private equity funds, the buy-a-visa system raised just $70 million. The former AIP regime attracted about $12 billion from offshore visa applicants during the 10 years until the rule-change with qualifying investments including vanilla equity and bond funds.
Now foreigners with at least $10 million – dubbed the ‘balanced’ category – to spend can buy a ticket to live in NZ by allocating to wide range of locally domiciled investments including bonds, philanthropy, property development, approved managed funds and listed shares.
But the ‘growth’ category rules still require AIP applicants with between $5 million and $10 million to invest directly into NZ businesses or through the approved list of fund managers.
While the new rules were expected to dampen demand for the venture/private equity fund options as visa-seekers sought the lower-risk route, Henderson said offshore interest has instead picked up.
“A good proportion of [AIP applicants] are still focused on the growth category,” he said.
The new visa system also allows ‘balanced’ AIP investors to reduce some NZ residency requirements by allocating any extra funds above the $10 million minimum to ‘growth’ options.
Cultivate is one of the 36 current AIP-approved managed funds – a list that has grown by four post the recent government changes including a new discretionary investment management services (DIMS) offering from Craigs Investment Partners.
While the potential visa-boost was welcome, Henderson said the manager was looking to broaden its investor base after raising close to $20 million to date over a couple of rounds since launching in 2023.
“We’re targeting a raise of up to $40 million in the latest round,” he said, “and maybe up to $50 million.”
The manager, which emerged out of specialist investment bank, Northington Partners, has mostly attracted investors from adjacent agricultural industry insiders and partners as well as bodies such as AGMART (Agricultural Marketing and Research Development Trust) – the entity established by the government in 1987 to encourage innovation in the local food and fibre sectors.
Henderson said the fund is also in talks with several KiwiSaver funds as the sector, encouraged by government, looks to up the ante on direct exposure to local growth businesses.
NZ private equity already has significant support from local wholesale investors such as community trusts while several KiwiSaver providers including Simplicity, Pathfinder, Mercer and Generate have made allocations to the asset class.
Mercer has also invested in global private debt while boutique scheme, Aurora, awarded NZ private debt manager, Private Capital Group, a small mandate last year.
The Cultivate investment theme, though, plays to traditional NZ strengths but also looks to benefit from technological advances in agriculture as outlined in a recent Boston Consulting Group (BCG) paper ‘Future of NZ Inc: What Will New Zealand Be Known for in 2050?’.
The BCG study named ‘agriculture 4.0’ as one of the key ‘ecosystems’ that could underpin NZ growth if all participants comprising industry, universities, start-ups, researchers and investors combine their respective strengths.
“There’s a real business opportunity,” Henderson said, which local investors – including fresh-off-the-boat residents – are waking up to.