Deals

New Zealand private equity investment falls 85%

A drastic drop in year-on-year deal value is 'less a judgement on private equity as an investment class but instead reflects events beyond our control', according to the New Zealand Private Equity & Venture Capital Association.

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New Zealand saw a total of 82 private equity investments last year worth NZ$178 million ($103 million; €77 million), down from NZ$1.22 billion in 2007. The total number of transactions, however, decreased by just three.

In terms of the total value of private equity investments, 2008 was the country's worst year since 2003, when NZ$87.7 million was invested, according to a study released by the New Zealand Private Equity & Venture Capital

The results are less a judgement on private equity as an investment class but instead reflect events beyond our control.

Franceska Banga

Association (NZVCA) and Ernst and Young.

Mid-market private equity activity in New Zealand in terms of both investments and divestments will be slower than normal until economic conditions stabilise, the study noted. “The results are less a judgement on private equity as an investment class but instead reflect events beyond our control,” Franceska Banga, the NZVCA chair, said in the report. 

The report noted the investment value for 2007 was inflated largely due to deals completed at the larger end of the market such as the CCMP Capital-led consortium’s acquisition of the Yellow Pages Group for NZ$2.2bn. In 2008, there were no such deals.

Total venture capital investment in 2008 was down 19 percent to NZ$66.1 million. The total volume of mid-market deals increased from 23 in 2007 to 30 in 2008, but the deals were smaller on average, resulting in a 45 percent decline in the total value of mid-market private equity investments to NZ$112 million.

The total number of divestments by private equity firms increased from 8 in 2007 to 11 last year. However, the total value of divestments declined from NZ$270.2 million to NZ$46.5 million.