Private Equity And Venture Capital Activity At Record Level

• Total investment and divestment activity across all investment stages increased to $4.3b in 2021, up from $2.5b in 2020.
• Mid-market activity was up 34% to $1.1b.
• Early-stage venture capital activity was up 3.9 times to $495.2m.
• The average investment transaction value for mid-market was $26.1m, slightly up on the prior year.
• Early-stage venture investment was $321.0m across 151 transactions, an increase from $127.2 across 92 transactions in 2020.

The New Zealand Private Capital Monitor produced by EY, was released today. It highlights strong investment in New Zealand businesses in 2021.

Philippa Weston, the chair of the New Zealand Private Capital, said: “It was a busy year for private capital investment in New Zealand, with $1.5 billion of capital deployed into accelerating the growth of New Zealand companies and reflects a strong and healthy private capital market.”

New Zealand domiciled funds continued to have the largest share of the Mid-market, including investments by Pioneer Capital, Pencarrow Private Equity, Milford Private Equity, Direct Capital, NZ Equity Partners, Oriens Capital, Genesis Capital and Waterman Capital.

EY partner, Brad Wheeler, said: “The outlook for private capital investors is more measured for the year ahead given growing financial and political uncertainties, but activity levels remain exceptionally strong.”

Over the decade to December 2021, $1.3 billion has been invested in 669 early-stage transactions. The venture capital divestment activity in 2021 increased to $174.2m across 10 transactions. This compares to one divestment where the value was not disclosed in 2020. The commercialisation of deep-tech and science innovation continues to attract investors leading to more funds with a specialist sector focus.

Buy-out investments were undertaken by both international and NZ funds, including KKR’s acquisition of K9 Natural Pet Food and Education Perfect. Successful divestments included Seequent, Evolution Healthcare, Arena Living and K9 Natural Pet Food Group.

Colin McKinnon, the New Zealand Private Capital executive director commented: “2021 certainly proved to be a stellar year for our industry with activity levels nearly doubling across the sector. The strong growth of early-stage activity was a highlight in this busy year. It included increased investment from local venture capital funds and participation by international funds, including Australia.

“The increase in early-stage venture divestment activity is a healthy indicator that the sector is building businesses from New Zealand that are globally relevant companies attracting investors to accelerate their growth ambitions.”

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