Auckland-based private investment firm Pioneer Capital has received the $100m fund injection from the $53 billion Super Fund, and has been tasked with identifying those companies that have established a market pathway in their early growth stages.
Pioneer Capital managing director Randal Barrett says health and wellness, premium food and beverage, technology and premium tourism ventures have all headed the investment list.
“While the covid pandemic has knocked back the tourism ventures for now, the primary sector certainly figures in the first two,” Barrett said.
The rapidly emerging health and wellness sector has distinct overlaps with the food and beverage sector, and is high on the list of investment priorities. Meanwhile, agri-tech is also providing investment opportunity, with options opening up considerably in the past four years.
The Super Fund will form the cornerstone investor for the funding round, providing $100m of the $250m being sought.
Barrett says investor interest in such funds has been getting stronger every year as NZ investors become more knowledgeable and confident about private equity fund operations as a new asset investment class.
The low interest rate environment is also prompting greater interest among wealthy investors seeking a higher rate of return, and he was confident the remaining amount would be secured.
“And we have a strong track record. These investments outperform listed markets, including the NZX, which has itself has been a good performer over the past seven years,” he said.
Companies that have already had investment through Pioneer include Rockit Apples and Natural Petfood Group.
“We will typically go out and approach companies that we hear are doing good things, and have passed through that ‘valley of death’ that comes with new startups. They have got their product right, are more than a one-man band, and ideally have established at least one export market,” he said.
For agri-tech firms that may be in Pioneer’s sights, it was essential the technology be transferable beyond New Zealand’s relatively limited market, and be usable in non-pastoral farm systems overseas.
For food products, the selling proposition usually required a well-branded product, rather than a particular ingredient within that product. Branding was something NZ food producers have become a lot more sophisticated at doing, Barrett says
“The NZ Story is an important part, but it is no longer the whole story,” he said.
He says while it was almost inevitable NZ would develop some technology for detecting and dealing with the covid virus, this effort was ubiquitous around the world and there was no particular reason NZ should be the winner in this competitive area.
“That is compared to the primary sector, particularly in dairy and horticulture. We are still getting products across the borders, there are some disruptions there but overall, the primary export sector is up on last year,” he said.
The NZ Super Fund head of external investments and partnerships Del Hart says high growth, mid-market type companies are an important part of the fund’s diversified investment approach, which aims to maximise returns without undue risk to the overall fund.
The NZ Super Fund has been investing in the sector for the past 16 years, and returns have typically been above its benchmark portfolio return level.
