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A drought of private equity funding has forced tech industry entrepreneur Peter Maire to sell up to a fifth of his stakeholding in quartz crystal component maker Rakon.
Maire, founder of navigation technology company Navman, yesterday sold between two and three million of the 14.9 million Rakon shares held by his investment vehicle, Tahia.
The sale raised around $7 million, which Maire intends using to increase his stake in car and marine audio company Fusion Electronics as it eyes further global expansion.
"The only reason we've done this is Fusion," said Maire. "We've been in the process of trying to raise private equity for the last couple of months. We had a number of interested parties who really just all melted away in the last few weeks.
"We really didn't have any option other than to sell something. It's a very reluctant sale for Tahia." Maire has been involved in Auckland-based Fusion for the past three years, and the increase in his stakeholding will see him take a majority interest.
He said the company has experienced strong growth, with a rollout of new products and wider distribution in the United States and European markets.
It recently clinched a deal to have its products sold in specialist consumer electronics retailing giant Best Buy's network of 1000 strong stores.
But additional funding was needed to continue the rapid expansion, said Maire, adding that a recession is a good time for new products.
"Recession was the best time of growth for us at Navman. Global retailers want new and innovative products on the shelves to keep drawing in consumers, but in recession the large, blue-chip brands tend to slow down."
He said Tahia would remain a significant shareholder in Rakon, but he saw no other way to fund Fusion's opportunities.
"Our venture capital market is non-existent at the moment. I'm getting three or four calls a week from tech companies looking for investment.
"I'm seeing some great stuff and there's nothing I can do except to try and refer them to any offshore contacts I've got. Even that's not really working at the moment."
Fusion had to fund tens of millions of dollars of forward orders, he said.
"It really just pushed me into a corner. There was really no other option but to sell a bit of Rakon which I do very, very reluctantly."
Maire said Fusion would have a turnover of about $35 million this year, heading towards $50 million next year, and was a long way from considering an initial public offering.
Rakon shares closed down 10c at $2.35 yesterday.
- NZPA
