Finistere to raise $87m for NZ companies

Arama Kukutai was previously North American regional manager for New Zealand Trade and Enterprise. Picture / Kenny Rodger

More than $300 million of overseas venture capital will soon be chasing investment opportunities in New Zealand after the launch of the third new fund in six months.

San Diego-based Finistere - a company managed by expat New Zealander Arama Kukutai - is looking to raise $US60 million ($87 million) for New Zealand investments.

It will launch in Auckland tomorrow as the third venture capital fund to enter the market this year.

In March, the $150 million BioPacificVentures fund was launched in Auckland to target agriculture and plant-based biotechnology in Australasia.

Its investors include Swiss food giant Nestle.

In June, PioneerCapital launched an $80 million fund to invest in IT, manufacturing, design and biotechnology.

Finistere will also target the agriculture and biotechnology sectors and already has about $45 million signed up from investors in both US and New Zealand.

New Zealand's reputation in science and innovation has driven the overseas interest.

But longtime local venture capitalist Bruce Sheppard, the Shareholders Association chairman, warned of a danger of too much money chasing too few opportunities.

Early-stage companies needed strategic management and globalised networking much more than money. The key issue for the new funds was to deliver those two things, Sheppard said.

"If they can't do that they are going to burn their money hand over fist."

Even with the three new funds this year, New Zealand still has a long way to go before it is over-capitalised, said Randal Barrett, a director with PioneerCapital Partners.

To put things in perspective, a report on the sector by Ernst & Young showed $158 million was invested in 29 companies in New Zealand last year, he said.

In the US - in the early-stage investment sector alone - more than $20 billion was invested in more than 2000 companies.

The New Zealand brand was starting to get "pretty hot" and attracting more interest from international investors, Barrett said.

But funds launched this year were probably just the start of the trend, he said.

To a large extent the new funds would be targeting different niches in the venture capital spectrum.

In fact an established US group like Finistere looked like a pretty good potential equity partner.

Wellington-born Kukutai, Finistere's managing director, was previously based in the US as the North American regional manager for New Zealand Trade and Enterprise.

The New Zealand launch will be done in partnership with a major international company, he said.

It was too early to reveal the name of that company.

New money

March: BioPacificVentures, $150m targeting agriculture and biotechnology in Australasia.

June: PioneerCapital, $80 million to invest in IT, manufacturing, design and biotechnology sectors.

This week: Finistere Partners, US$60m to invest in agriculture, biotech and medical equipment.