Private equity fund sniffs the air

17:00, Sep 06 2011
George Kruse
FACT FINDER: George Kruse, managing director of United States private equity firm Vesta Equity, gets a feel for Christchurch.

United States private equity firm Vesta Equity has been in Christchurch investigating whether it can become involved in the earthquake rebuilding.

Managing director George Kruse said he had been in New Zealand for 10 days looking for real estate opportunities, but that further research was needed before Vesta Equity would be prepared to invest at least $50 million in the rebuilding.

He said that up to now all the firm's investments had been in the US. But in view of economic problems in the northern hemisphere the company has decided to come to Canterbury.

"One of the things we're looking at is obviously the US economy, its uncertainty, and we feel stronger about the New Zealand economy," he said.

Kruse said he had been alerted to the Canterbury proposition by Vesta's founder and owner, David McIntyre, who had been in and out of the city since about December.

McIntyre is also the owner of Ceres Environmental, which is a US disaster recovery contracting firm which has established a New Zealand operation.


Kruse said Vesta's preliminary work had included talking to property owners and developers to assess what part Vesta could take in the rebuilding.

"We're just trying to gather up as much information about what's going on with insurance, redevelopment and the new city plan and to get some feelers out to individual property owners."

He said there was still a lot more information to gather.

Kruse said initial meetings had been held with half a dozen property owners and their legal representatives, but not with the city council.

"We're talking to a pretty broad range of people. We're talking to attorneys all about the legal structure as well informally about their clients. We've talked to engineers, we've talked to groups of property owners," he said.

He did not want to disclose exactly who he had talked to.

Vesta has left three representatives in Christchurch for another week.

Justin Murray, of investment firm Murray & Co, said he had heard of Vesta's interest in Christchurch and was watching developments.

Murray has voiced concern about the rebuilding, saying the biggest challenge is financing.

Yesterday Murray said he thought there would be interest from financial investors abroad, and Vesta was an early example of this.

Kruse said Vesta did not usually buy assets itself.

"Everything we do, whether it be providing bank debt or equity or going in with somebody to a joint venture, is always done with someone locally who has the experience and the ability to manage, operate and control a property."

Kruse said property owners were understandably weighing up the option of reinvesting insurance pay-outs in other places, such as Wellington, Auckland and Australia.

"From people we've talked to, the vast majority have every intention of staying in Christchurch, but ... a few people may be questioning it."

The Press