South Island-based Genesis Private Equity has launched its second investment partnership fund for wholesale investors.
The company was established three years ago to invest capital and commercial governance expertise into a portfolio of small to medium-sized private companies identified as having significant growth potential.
Genesis Private Equity is the only South Island private equity company offering investments through portfolios of private companies to wholesale investors (meeting Financial Markets Conduct Act criteria).
The first of its partnership funds closed in 2016 after raising $11.875 million from business, professional, and farming sectors, with an average investment of $453,000. Through this fund it has invested in four businesses, with a fifth investment expected later this year.
The second partnership targets a capital raise of up to $30 million, and is exclusive to wholesale investors applying for a minimum investment of $250,000. The fund opened on 1 August and will close on 31 October 2018 unless it reaches its target sooner, or the directors extend the closing date.
Genesis Private Equity shareholders, investors from the company’s first fund, and others in the Genesis network have already committed capital of $6 million to the second investment partnership.
Founded by bankers Kieran O’Hagan and Nathan Mills, Genesis’ five other directors are John Rolleston (chair), Howard Smith, Grant Jarrold, Garry Haskett and Paul Davis. Their collective experience includes senior management and/or governance responsibilities in accountancy, banking, bio-technology, business valuation, farming/agriculture, FMCG, food and beverage, funds management, manufacturing, law, software and hardware technology, telecommunications, property management and real estate. Leandra Fitzgibbon has recently joined Genesis as a Partner/In-house Counsel.
The company targets opportunities arising from small to medium-sized organisations requiring a succession plan to free up equity, needing new capital to expand, where managers want to buy out existing owners or buy into the business, or where a business requires recapitalisation.
“Around 35 per cent of New Zealand’s gross domestic product (GDP) is generated by small to medium -sized private companies, and there’s plenty of research indicating that owners of many of those businesses are fast approaching retirement and want to release their equity,” says Chairman John Rolleston.
“We’ll typically assess around 50 businesses to identify the one or two that meet our specific criteria. We’re looking for a history of consistent and improving financial performance, a sound economic business model, conservative capital structure; and sustainable competitive advantage. We also need to be confident there is experienced management already in place and that Genesis equity and involvement at board level is welcomed to help achieve growth targets” says Rolleston.
Genesis’ own directors are available to take up governance roles within its investees and also draw on their wider business networks to ensure experienced, industry relevant representation.
The first partnership fund invested in companies Ask Holdings, TracMap Holdings, Bachcare and Freedom Internet. A fifth and final investment for the first partnership is in the final stages of due diligence.
The four companies invested in to date have shown solid gains and increases in sales revenues.
Colin Brown, Founding Director of TracMap Holdings Limited says “It is one thing to have an investor who brings just cash, and a focus on how quickly they can achieve an exit and a return on their initial investment. It is another to have an investor that really wants to understand your business and its value drivers, and then partner in making it all happen.”
“The people at Genesis are trustworthy, balanced and talented. They are the smart money, and importantly fun to work with…their focus is on developing good business and good relationships which is the result of a team’s hard work.” Andrew Bayly, Chairman of Ask Holdings Limited.