Well, it looks like New Zealand pretty much matches the rest of the world in returns from private equity investments.
Till now, no one was able to say with any degree of accuracy what the rate of return has been in our country, but work carried out by NZ Venture Investment Fund investment director, Aaron Tegaskis, has changed that.
After confidential discussions with investors, and agglomerating the figures, it has been shown that for every dollar invested in NZ companies, $2.54 was returned. The actual figures were a return of $1.72 billion on investments of $675 million between 1994 and 2010.
This equates to an internal rate of return of 33.5%, though it is before management fees and costs are accounted for. The investment size range in New Zealand is from $2m – $100m, though there have been larger PE investments.
The average holding period for the 74 examined investments was four years.
The full range of outcomes were:
• 6 investments earned over 5x its investment
• 30 earned more than 2x its investment
• 24 earned between one and two times its investment
• 20 investments earned less than its investment
Exit types were also consistent with overseas data.
• 24 trade sales
• 22 sold to existing management or shareholders
• 15 secondary sales to another PE firm or financial investor
• 12 sharemarket listings
• 5 dead on arrival