Big spender eyes CHH

Joseph Skrzynski says private equity will take a bigger role in buyouts in the future. Picture / Brett Phibbs

Heavyweight Australian investor Champ Private Equity is kicking the tyres on four New Zealand companies and has Carter Holt Harvey in its sights as it looks for suitable targets for its new $1 billion fund.

Champ, a veteran of Australia's private equity market, has secured A$950 million ($1.05 billion) in commitments from large institutional investors for the new Champ II fund.

Managing director Joseph Skrzynski was in Auckland yesterday to put the finishing touches on Champ's shortlisted bid for "a good size" local business worth more than A$100 million.

Skrzynski would not disclose the name of that business.

Champ, created by the 2000 merger of Skrzynski's AMIL and US buyout specialist Castle Harlan, has been working with the management of the company to buy out the business, a division of a larger New Zealand company.

To date, Champ's investments have all been in Australia but it has been looking for opportunities in New Zealand for the past 18 months. It bid unsuccessfully for Tenon's structural sawmilling assets this year, which ended up going to CHH.

Apart for the as-yet-unnamed company Champ is bidding on, " ... there's four others that are of interest to us that we think will become available at some stage".

"Probably the biggest news in private equity in New Zealand just coming up on the horizon is Carter Holt Harvey itself," Skrzynski said.

"There's a number of us in private equity looking at that and I think there will be at least one syndicate, maybe two, that will be bidding for that against trade buyers.

"It's over $3.5 billion and that will be the biggest deal in private equity down in this part of the world ever - if private equity succeeds in buying it."

Skrzynski believes private equity funded buyouts will, in years to come, grab an increasing share of what he estimates is a $2 billion to $3 billion a year local merger-and-acquisition market.

"If New Zealand follows the more mature markets such as the US and the UK, private equity could hope to do maybe 20 per cent of that activity and, therefore, we should be looking at A$400 million to A$600 million a year in value in the near future."

Champ Private Equity and its predecessor, AMIL, has returned about 30 per cent a year to its investors but the funds are long-term investments.

The New Zealand Superannuation Fund has dipped a toe in the sector, committing an initial $23.75 million to the AMP Pencarrow private equity fund in June.

This year, the fund increased its planned private equity and alternative investment allocation from 7 per cent of the fund to 25 per cent over the long term.

It also appointed advisory firm, Quentin Ayers, to review New Zealand private equity investment opportunities.