Super Fund may put $60m into VC market

The New Zealand Super Fund is considering investing $30m to $60m in New Zealand private equity funds that provide expansion finance to young firms. The move has been heralded as a potential shot in the arm for the venture capital market and technology start-ups.

Venture capital firm Endeavour is among the fund managers that have responded to a request for proposal issued by the Super Fund. Chairman Neville Jordan hopes to find out next month whether its bid has been successful.

Endeavour is raising capital for a new venture capital fund, for which it has been promised $20m in matching investment from the Crown-owned New Zealand Venture Investment Fund. Mr Jordan says support from the Super Fund would also likely help increase interest from private investors.

Endeavour hopes to get the fund up and running early next year, at which point it will be ready to begin investing, and aims to close it off to investors mid-year. Endeavour's existing i-Cap fund has invested in companies that include mobile payments company GFG Group and secure email firm SMX.

Venture Capital Association chief executive Colin McKinnon says the development is a very positive one for the venture capital industry. "The fact NZ Super is participating in this space sends a very strong message to other institutional investors."

Super Fund spokesman Paul Gregory says it could appoint "anywhere between zero and several" fund managers. "It depends on who is impressive and has the track record and who we think we can work with."

The fund has almost $15b under management. It has a target of investing 5 per cent of its assets in private equity. At the moment it is sitting at 1.1 per cent. Mr Gregory says about 5-10 per cent of the new allocation is likely to be with New Zealand fund managers.