Private equity funds have proved popular with investors, with Direct Capital and ABN Amro Craigs raising $82.5 million for their Pohutukawa II fund, including $22.5 million of oversubscriptions.
ABN chief executive Frank Aldridge said Pohutukawa II was set up to give retail investors an opportunity to invest alongside institutional investors in Direct Capital IV, all managed by Direct Capital.
Combined, the two funds would have up to $250 million for investment in private companies.
"To raise $82.5 million in the current market is an exceptional result in extraordinarily tough market conditions.
"These investors understand that the next three to four years are likely to represent a period of very good investment opportunities for well-capitalised businesses."
The success of the Pohutukawa I fund had prompted the second initial public offering (IPO), Mr Aldridge said.
The first fund had invested in mid-range profitable unlisted companies such as Express Logistics and New Zealand King Salmon. There were plenty of other unlisted companies which remained profitable even during the downturn and investors were becoming more comfortable with private equity investments in their portfolio, he said.
"In the current environment, these unlisted companies are picking up good-quality business at very good prices."
The unlisted company investment sector was larger than most investors realised and was providing some good growth prospects.
Pohutukawa II would invest in companies with between $50 million and $100 million in sales. Direct Capital director Ross George said there had been a shift away from complex debt instruments back to simple investments of equity into good, low risk, profitable businesses that just happened to be privately owned.
Pohutukawa II and Direct Capital IV would invest alongside each other in private companies operating in New Zealand and Australia in three main situations:Providing capital to help companies grow organically or through acquisition;Helping management teams acquire business from older owners as part of a succession plan;Investing in companies planning an initial public offering (IPO).
Direct Capital's investment in the likes of Ryman Healthcare and Nobilo Wines ahead of their listings had been a good example of early investment, Mr George said.
