New Zealand Private Capital Monitor 2022

2021 was another record year of activity, with $4.34 billion of combined investments and divestments.

In this, the nineteenth edition of the New Zealand Private Capital Monitor, we have consolidated the findings from previous surveys and provide a more detailed review of 2021 including commentary on the industry from the New Zealand Private Capital Association’s Chair.

2021 was another year of record activity, with $4.34 billion of combined investments and divestments across private equity and venture capital transactions, weighted heavily towards divestment activity. Significant divestments included the sale of Seequent, and Evolution Healthcare.

Total investment activity decreased in 2021 and totalled $1,483 million, compared to $2,419 million in 2020, with 2020 being impacted by a single large transaction (EQT transaction). There was an increase in the total number of investments in 2021 (179) compared to 2020 (128) albeit many of these investments were Venture and early stage capital with lower average transaction values.

Private equity investment excluding venture capital reached $1,162 million, compared with $2,292 million in 2020 and $1,034 million in 2019.

Venture and early stage capital in 2021 totalled $321.0m, an increase from $127m in 2020 with international investment in IT / software companies continuing the theme seen in recent years.

The commitment to growing New Zealand’s businesses has been clear in responses to the Monitor, with the continued plans for their investee companies focussing on growth in exports and new markets, increased capital expenditure and acquisitions.

Fund-raising activity in 2021 by New Zealand funds raised over $741 million of capital and further fundraisings are anticipated for 2022.

The respondents did highlight some caution compared to prior years reflecting a higher inflationary environment, higher interest rates and supply chain constraints impacting business confidence.

Private capital is a significant contributor to the New Zealand capital market eco system. With the world now looking forward beyond Covid-19, private equity and venture capital fund managers continue to support the future growth ambition of great New Zealand businesses through their expertise and assistance to founders and managers, as well as additional capital support.

We see private capital continuing to play an important role throughout the coming year in accelerating the ambition of many New Zealand businesses as they cope with uncertainties stemming from a range of challenges such as supply chain issues, labour shortages, and an inflationary environment.