The New Zealand Superannuation Fund is investing in a new private equity fund that will back Kiwi companies looking to go global.
Matt Whineray, general manager investments for the superannuation fund, said the fund's $40 million investment with Pioneer Capital was part of a broader strategy to provide expansion capital to local small-to-medium-sized businesses.
"There is a significant pool of smaller, high-growth companies in New Zealand that can potentially provide attractive investment opportunities to long-term investors such as the fund," he said.
The superannuation fund has about $3.5 billion invested in New Zealand, including more than $1b in the local sharemarket, up from $2.4b in June 2009.
Previous fund commitments to New Zealand expansion capital include $30m with Pencarrow Private Equity in 2011 and $30m with Waterman Capital in 2010.
Other New Zealand institutions, private investors and the Pioneer Capital team have also contributed to Pioneer's second fund, PCPII, which is expected to soon close at its $150m cap.
Pioneer Capital managing director Randal Barrett said there had been strong support for the second fund and it was good to get the superannuation fund in as a cornerstone investor.
Barrett said Pioneer Capital focused on well-managed New Zealand businesses, typically exporters that were expanding in large international markets, earning meaningful revenue and delivering high-value products and services to their customers.
"Our investment capital, with a target range of $10 million to $30 million per investment, is primarily designed to fund expansion, which may include acquisitions," Barrett said.
"It may also provide a bridge to public markets or a change of ownership. Key for us is the calibre of management and the nature of the international markets in which they are expanding their business."
Pioneer Capital investments include recently listed online retail search provider SLI Systems, healthcare software provider Orion Health and premium beer producer Moa Group.