Thursday 16th May 2019
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Rangatira Investments plans to increase its holding in research technology business Magritek as it deploys funds from the sale of its interest in smallgoods maker Hellers.
The Wellington-based investment company expects to buy Massey University’s stake in the company which makes benchtop nuclear magnetic resonance spectrometers for diagnostics, industrial analysis and research.
That will take its stake in the firm, founded by the late Paul Callaghan and now largely based in Germany, to about 25 percent from 18 percent, Rangatira shareholders heard today. The firm initially paid $4 million for a stake in 2013.
“It’s only a modest investment in terms of Rangatira but we think there’s some growth there,” chief executive Mark Dossor said.
Rangatira, which trades on the Unlisted exchange, has shareholders’ funds of more than $250 million. Founded in 1937, it aims to partner with “the best” business leaders to grow New Zealand businesses and to extend the charitable work of founder John McKenzie.
The company, half-owned by the JR McKenzie Trust, hasn’t disclosed how much it sold its controlling stake in Hellers for.
Dossor noted that at one stage Hellers accounted for more than a third of Rangatira’s portfolio and delivered average returns of 21 percent for the 15 years it was involved.
Since the sale, Rangatira has put almost $30 million more into listed equity investments, but about 29 percent of its portfolio remains in cash.
Dossor said the company will next month complete a small investment with other partners in a gold kiwifruit development.
But finding suitable private investments to get the cash component of its portfolio down to the targeted 10 percent could take two or three years, he said.
The firm’s seven private investments – including the Polynesian Spa, Rainbows End theme park, insurer Partners Life and biscuit maker Mrs Higgins – “need to be bolstered by probably three or four others that will create value longer-term,” he said.
That would take the current value of the private investments from about $105 million now to $175 million over the next three years.
Dossor said the firm won’t over-pay for assets but does face increased competition from other funders, including from Australia.
Its ability to invest for 20 years-plus remains an advantage, he said, given most private equity investors are aiming to exit within three to five years and the strain that sort of “aggressive approach” can put on a business.
Healthcare, logistics, food, financial services and tourism remain favoured sectors.
Within its increased equity holding, Rangitira late last year added a portfolio of energy stocks, including Infratil and some of the major listed generators, for yield. Growth stocks it holds include Mainfreight, Ebos, Auckland Airport and Scales, he said.
Rangatira has also allocated US$5 million to London-based Intermede Investment Partners to invest on its behalf. It also retains direct holdings in international stocks including Reckitt Benckiser, Rio Tinto, BHP Billiton, Shell and BP.
Chair David Pilkington said the firm’s plan over time is to put all its international equity investments through a fund manager.
“We don’t see ourselves as stock-pickers.”
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