New Zealand firm Oriens Capital set up this year has raised NZ$32 million ($23.22 million; €20.83 million) for its debut fund, which has a NZ$60 million target and is set to close at the end of December, according to the firm’s chief executive James Beale.
Oriens is targeting mid-market businesses in New Zealand for its Private Equity Fund, including food production, and agtech and agricultural services companies. Investors are community entities such as publicly owned trusts or council investment entities, iwi organisations (Maori investment entities), private charitable investors, private businesses and high net worth investors, according to Beale.
The fund has also explicitly excluded farmland.
“Farming in a New Zealand context tends to be asset-heavy due to land values, therefore return on investment, on a straight cashflow basis, is often challenging,” Beale said. “Food production is interesting in a New Zealand context due to the staple nature of the product and cashflows, and efficient production processes that exist in New Zealand.”
“We don’t have a specific allocation to any specific industry sectors,” said Beale. “However, with respect to agri-tech and food, being located in Tauranga, New Zealand, at the site of New Zealand’s largest export port, and, more generally having a regional focus for the fund, we expect to see some quality opportunities in the space. ”
He said domestic businesses can be attractive as limited market size leaves less room for new competitors, while export focused food businesses have a relatively large potential market and can attract premium pricing, “trading off New Zealand’s image as a producer of high-quality agricultural produce”.
Beale also said that local agtech was becoming increasingly attractive in New Zealand, because the need to find cost-effective solutions to labour and productivity issues, as well as specialist service providers, such as plant and animal diagnostics. However, he added that the number of opportunities in the space could be limited.
“There are many new technologies emerging in New Zealand. We are fortunate to have an improving early stage funding infrastructure… [providing] some initial support to this market,” he said, but went on to explain that “as a fund focused on profitable entities there is some way to go in the development lifecycle before many of these opportunities will be on our radar.”
The fund will target companies worth between NZ$10 and NZ$50 million, and have a five year investment period. Limited partner investors can meet to call for a wind-up of the fund after 10 years, according to Beale. The fund has not outlined specific allocation targets for different sectors, but will seek strong opportunities as they present themselves, according to Oriens’ website. Its target sectors other than food production, agribusiness and agtech are specialist manufacturing, transport and logistics, export businesses and tourism.