Venture investment falls after recent highs
New Zealand private equity and venture capital investment slumped nearly 80% from $554 million in 2011 to $111.4 million in 2012.
The number of deals and the average deal value also fell year on year.
The latest full year monitor, released by the New Zealand Venture Capital Association (NZVCA) and Ernst and Young, showed a continued trend of steady investment in the mid market and a decline in venture and early stage activity.
“The number of mid-market deals was the same as the previous year, but the average deal value decreased from $18.6 million to $7 million,” says Ernst and Young partner Andrew Taylor.
In 2012 there were 62 deals, down from 84 in 2011, with average deal value down from $6.6 million to $1.8 milion. No buyouts were recorded.
Venture and early stage investment activity fell from $36.6 million in 2011 to $26.8 million in 2012.
“2012 was a year of lingering uncertainty, impacting M&A activity globally”, said NZVCA chairman Matthew Houtman. “Aside from the ebb and flow of buyout deals, the activity of New Zealand domiciled managers has been consistent.
“The declining activity for venture and early stage reflects the dual challenges of fundraising for venture managers and the consequent shallow pools of new capital available for companies seeking to raise capital in the $2 million to $10 million range to fuel growth.”