Equity fund asks investors to wait for better times

A multimillion-dollar private equity fund with stakes in two car rental companies and New Zealand's largest marketer of fragrances and cosmetics has asked its investors to consider waiting up to two years to get their money out because it doesn't want to sell up in the tough economic climate.

The AMP Private Capital NZ Fund was due to wind-up in March next year after 10 years of investing in private and listed New Zealand companies.

It raised $56 million from investors in 1999 and 2001. But the fund, which is managed by AMP Capital, has been losing money by selling its investments and now wants investors to vote on a two-year extension to give it time to sell the remaining assets.

Accounts for the fund filed with the Company's Office last month show it made an unrealised loss of $15.226 million in the 2008 year.

In a letter to investors, director Nick Dobson aid the fund had to make significant write-downs on its investments in ACE rental cars and Pacific Horizon campervan rentals.

"These factors severely influenced the overall performance of the fund, resulting in the total estimated value per share declining 38 per cent over the year."

He said the fund had sold its stake in Methven for $6.047 million as well as its investment in Design Mobel for $330,000 but had made a net loss of $318,000 from the December investment values.

Since December it had also sold a 21.4 per cent stake in Auckland tourist ferry operator Kiwi Kats and a 9 per cent stake in transport company Eastern Equities Corporation. AMP Capital has a 20 per cent stake in cosmetics marketer CS Company.

Dobson said AMP had reviewed the timing of the sale of its remaining assets and believed the life of the fund should be extended by up to two years to enable the stakes to be sold with a greater degree of flexibility.

One investor, who did not wish to be named, feared even if the fund managed to get the extension, investors would still be out of pocket because the company stakes were not worth as much as their valuations.

So far the fund has returned $10 million to investors and a further $9 million is due to be paid out in October.

Investors are expected to find out more about the extension at the fund's annual general meeting on August 31.