KEY POINTS:
A private equity investment company behind the expansion of EziBuy and Max Fashions is hoping to raise $250 million to allow it to snap up more opportunities.
Direct Capital will today announce the launch of its Pohutukawa II fund in conjunction with brokers ABN Amro Craigs.
The fund aims to raise at least $60 million from the public with the potential for a further $60 million in oversubscriptions.
That money will be invested in a larger fund called Direct Capital IV, where it will sit alongside investment from institutions.
Managing director Ross George said it had been decided to launch the new fund on the back of demand from a number of institutional and retail investors. The last time Direct Capital raised money from the public was in 2004.
George said the company had generally stayed away from investing in new businesses over the past few years because cheap debt had pushed up prices, making it harder to compete.
But he believed economic turmoil would result in a number of good opportunities as companies sought to reduce debt and move back to a more traditional equity base for funding growth and making acquisitions.
"It's a reality of this economic climate that well-funded companies with strong balance sheets will do well in what is going to be a tough period generally."
The money raised will be invested over the next one to three years in mid-market companies valued at between $20 million and $100 million.
Direct Capital's previous investments have included GoBus, EziBuy, Innovair, Robin Hood, Max Fashions, Nobilo, Selaks and New Zealand Pharmaceuticals.
