Press Release - Private equity investment doubles in 2010 - Ernst & Young - New Zealand

Clare Farrant
Senior Communications Manager
Ernst & Young
+64 9 274 899 700
clare.farrant@nz.ey.com

Private equity investment doubles in 2010

Private equity deals in the New Zealand market continue to increase in value and number as market confidence grows with a broad range of opportunities emerging for persistent and astute investors particularly in the mid market,” says Andrew Taylor, partner Ernst & Young.

The 2010 New Zealand Private Equity and Venture Capital Monitor, released today, recorded an increase in total investment value of 89% on 2009.

“Mid-market investment value more than doubled affirming its stability and capacity to weather recent volatility in financial markets,” says Taylor.

The full year Ernst & Young and NZVCA Monitor results 2010 show:

·         Total investment value in 2010 was $294.4m, an increase of 89% on 2009, driven by mid-market private equity activity which grew from $58.7m in 2009 to $130m in 2010

·         Venture and early stage investment activity grew from $34m in 2009 to $94.4m boosted by international deals totalling $45m.

·         NZ domestic venture and early stage activity was subdued especially in the $2m to $20m investment range with most local venture funds now fully invested

·         Buy out activity in 2010  continues to be subdued although secondary activity is beginning to emerge

·         The number and value of investments increased reflecting mid-market resurgence and two large venture capital deals

·         Total divestment value decreased to $108.7m in 2010, down from 2009 which included two significant top-end divestments with a combined equity value of $390m. Divestments also decreased in number

·         Strong mid-market divestment activity with value increasing by 81% on the prior year

NZVCA chairman Kerry McIntosh said that conditions for private equity had gradually improved throughout 2010 resulting in the highest level of activity since 2007. This was primarily driven by NZ domiciled mid-market private equity funds which had their most active year since 2003. This was on the back of a series of successful fund raisings in 2009.

Investment by NZ domiciled venture and early stage funds continued at the subdued levels experienced in 2009 with most activity focused on smaller, early stage investments. The subdued investment activity reflects an industry where most if not all of the local venture funds are now fully or close to fully invested. Raising new funds has been challenging as the fund raising environment for venture remains difficult both internationally and in New Zealand.

“NZVCA believes that a vibrant, healthy and active venture market is a key ingredient in harnessing innovation as a source of economic growth. In order to address the funding issue we are working with the venture industry and a range of government agencies including NZTE and NZVIF to identify and implement industry wide solutions,” says McIntosh.

Ends.

Media contact:

Ernst & Young: Clare Farrant 0274 899 700 clare.farrant@nz.ey.com

About the New Zealand Private Equity & Venture Capital Association 
The NZVCA is a not-for-profit industry body committed to developing the Venture Capital and Private Equity industry in New Zealand. Its core objectives include the promotion of the industry and the asset class on both a domestic and international basis and working to create a world-class Venture Capital and Private Equity environment.  Members include Venture Capital and Private Equity investors, financial organisations, professional advisors, academic organisations and government and quasi-government agencies.

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