Venture capital tucks into food

A record level of private equity and venture capital investment cash has been chasing opportunities in the food and beverage industry during the first half of this year, the NZ Venture Capital Monitor says.

The monitor, jointly produced by Ernst & Young and the Venture Capital Association, said a record 54 deals were completed in the six months to June, with an adjusted investment value of about $434 million.

This compared to 25 deals worth $27 million for the same period last year - although last year's figures did not incorporate the activity of overseas funds in New Zealand.

Ernst & Young director Jon Hooper said the same level of activity was unlikely in the second half of the year, but the message was encouraging.

"This level of investments is a spectacular start to the year, and reflects a new level of maturity for the New Zealand industry," Hooper said.

"The strong interest shown by both New Zealand and international investors is an endorsement of the quality of deals available."

The average deal amount was $8 million.

"The average deal size has historically been around $2 million," Hooper said. "But five large private equity deals have skewed the average for this period."

These private equity deals involved Griffins Foods, Tegel, Metropolitan Glass, Hirepool and Kathmandu.

Auckland was still the preferred location for investment, although the South Island attracted an increasing number of deals - 20 per cent of the number and 12 per cent of the value.

Private equity made up 94 per cent of investments by value compared to 6 per cent for venture capital - a more pronounced split than in previous surveys.

But venture capital accounted for 67 per cent of the number of deals.

Venture Capital Association council chairman Mark Dossor said it was promising that exporters were attracting private capital for growth.

"This will be a growing trend as a falling New Zealand dollar, combined with investment capital will provide New Zealand companies with a strong platform to expand."