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Pencarrow Private Equity targets local companies, launches $77 mln fund

Friday 9th December 2011

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Pencarrow Private Equity is targeting well-managed local companies with an eye on expansion for its new $77 million fund.

The fund announced its first close today, securing a $30 million cornerstone investment from the New Zealand Superannuation Fund, with the balance made up by New Zealand institutional investors and high net worth individuals.

The fund will stay open for foreign investors with the goal of raising a further $75 million, and will look to invest in privately-held mid-market companies with enterprise values of between $20 million and $100 million.

Pencarrow’s past investments include paper merchant BJ Ball and buggy maker Phil & Teds.

Pencarrow executive director Nigel Bingham told BusinessDesk the fund will look to make between six and nine investments, and will look for companies that are on the verge of expansion and need some seed capital or are trying to break into international export markets.

“We’re looking across a broad range of interests, but there’s nothing sector specific,” Bingham said.

The fund will probably look at leveraging New Zealand’s strong ‘baby boomer’ demographic, and the prospect of multi-national companies looking to spin off non-core assets, he said.

Bingham said the fund will have a five-year investing period and will prefer companies with strong management teams.

“We like having managers having a significant stake in the business as it gets incentives aligned,” he said.

Pencarrow specialises in providing expansion capital for small to mid-market firms and enabling management buy-outs of businesses.

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