KEY POINTS:
What is it called and what sort of savings product is it?
Pohutukawa Private Equity II is a specialist private equity fund.
Who is the company behind it?
The fund is being promoted by sharebrokers ABN Amro Craigs and the actual money is being managed by Direct Capital. ABN Amro Craigs is one of the largest retail sharebroking firms in New Zealand. Direct Capital is a specialist private equity firm run by Ross George. It was established in 1994 and since then has raised seven funds with total capital available for investment of more than $440 million.
Who is the target market?
The higher risk investor who is prepared to take equity like risks over a long time horizon.
What return does it offer?
Private equity funds don't stipulate anticipated return figures, however much of the research suggests that these types of fund produce better returns than listed equities.
When was it launched?
The fund opened on November 27 and is due to close at the end of this month.
What other products is it like or is it competing with?
There are very few retail private equity funds in New Zealand. ABN and Direct launched an earlier version of Pohutakawa in 2004.
Is it long term, short term or medium term?
If ever there was an investment on the never, never this is one of them. It doesn't have a set end date and investors are required to contribute their capital over time when calls are made. On application they have to pay 10c per share, and are required to pay the outstanding 90c over time when calls are made.
What is the unique selling point?
Private equity often has attractive returns, and it gives investors access to mid-market companies which often have good growth prospects.
How strong a stomach do you need for it?
Private equity is a higher risk form of share investment.
What's the hitch?
There are many things to be careful of with private equity funds like this. Investors have to be able to pay call amounts when asked for them, there is no liquidity in the fund, and while they are closed there is no set maturity date either. The minimum application is $20,000 which is paid over time.
