Bio fund’s $150m launch

Announcing the BioPacificVentures fund were, from left, Bill Kermode of Direct Capital, Erich Sieber and Craig Norgate. Picture / Kenny Rodger

The biotech industry got a $150 million boost yesterday.

Swiss food giant Nestle has joined local investors to launch the BioPacificVentures fund, which will be the largest in Australasia focusing exclusively on life sciences.

Life science involves plant and animal-based technology targeting human therapeutics, agricultural improvements, nutritionally enhanced foods and food safety.

Although Nestle is the biggest investor, the company will not say how much it has committed to the fund, which was launched at the New Zealand Biotech conference in Auckland.

The second biggest investor is the Swiss venture capital company, Inventages - which already manages global funds worth $900 million.

Inventages will manage BioPacific in partnership with AgResearch and Direct Capital - the two local organisations that got the project off the ground.

Government crown research agency AgResearch developed the vision for a life science fund three years ago. With backing from local venture capitalists Direct Capital, it launched plans for a $100 million fund last year.

But BioPacific executive director Howard Moore said bringing Inventages into the partnership had been a major coup.

He said it would provide a strong global network of contacts as well as proven business development skills.

Inventages' working relationship with Nestle has already been instrumental in getting the multinational involved in the fund.

It has also ensured the partnership will exceed its initial target.

Moore said $100 million in funding had already been raised, an extra $50 million would now be accepted on a "first in basis".

None of the money has yet been assigned to investments but talks have already begun with potential targets.

The fund would be looking to invest in private companies on both sides of the Tasman.

Inventages investment manager Erich Sieber, a former Nestle executive, said it was clear New Zealand had excellent research going on in agriculture, food and food safety.

Carrying out research was also about 50 per cent cheaper than in Europe.

The problem had always been the limited resources available to commercialise that science with research companies being forced to list on the sharemarket too early.

"One reason this fund is so big is so it can carry companies from pre-clinic trials until they have products ready for market," Sieber said.

The biggest local investor will be rural services company Wrightson, which has committed $14 million.

Wrightson sold out of its $12 million stake in listed biotech company Genesis research earlier this month.

Wrightson chairman Craig Norgate said the BioPacific partnership was a "dream team".

The company's primary reason for investing was to reap dividends from its commercial success.

Government-funded investment agency New Zealand Venture Investment has also put money in.

Several other key investors have declined to be named.