Kiwi Wealth invests more into private equity

Kiwi Wealth KiwiSaver has committed up to $50 million to leading investment firm Pioneer Capital with a focus on New Zealand businesses exporting high-value products and services in large international markets.

Monday, May 10th 2021, 2:49PM

by Matthew Martin

Melissa Vasta.

The commitment is part of Pioneer Capital’s latest $300 million fund - Pioneer Capital Partners IV - and sees Kiwi Wealth joining cornerstone investors such as the NZ Super Fund ($100 million invested) and Ngāi Tahu Holdings ($30 million), with funds being drawn down as underlying investments are made.

The news follows last year’s announcement of Kiwi Wealth KiwiSaver Scheme’s cornerstone investment in the Movac Fund 5, a technology fund of venture capital firm Movac.

Its latest investment is designed to give KiwiSaver members more access to private business in the high-growth export sector.

Kiwi Wealth retail and product general manager Melissa Vasta says Pioneer Capital has a strong track record in an investment market where there are few players in New Zealand.

"This is good news for 'NZ Inc' and follows the direction of travel for global investment and the delivery of value to shareholders," she says.

"Kiwi Wealth KiwiSaver Scheme members will know that some of their investments are being held in companies that are generating value for the New Zealand economy, creating local jobs and delivering good
returns.

"While this is a small allocation of our total KiwiSaver funds, it represents a significant opportunity for internationally focused Kiwi businesses to continue to make their mark on the world stage.”

Since it was founded in 2005, Pioneer Capital has invested in 23 Kiwi businesses that have an aggregate annual revenue of over $1 billion, of which over 85% is earned outside New Zealand.

Kiwi Wealth chief investment officer Simon O’Grady says the agreement with Pioneer Capital represents another step in Kiwi Wealth’s burgeoning series of private equity investments.

He says 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.

Pioneer Capital managing director Randal Barrett says Kiwi Wealth is one of the only KiwiSaver providers to give its members access to private businesses in New Zealand, which make up the vast majority of New Zealand’s economy by proportion of GDP and industry diversity.

“In the pandemic economy, private equity-owned businesses have had the luxury of being tightly held and governed so they can make quick decisions and move to avert risk and take advantage of opportunity.

Barrett says Pioneer Capital Partners IV will make its first few investments into high-value export-focused companies within a year and, as an open-ended fund, can take a long-term view with these and additional investments.

“New Zealand is incredibly well placed in the world markets; its profile has risen and in the sectors in which we focus many New Zealand companies are internationally competitive and have grown to scale very quickly in large markets.

"Our goal is to turn these companies into mini-multinationals, with operations on the ground locally and capability around the world."

Tags: investment kiwi wealth KiwiSaver Ngāi Tahu Pioneer Capital