The fund manager raised $100million from new and existing clients that its private equity team, headed by investment directors Brooke Bone and John Johnston, will co-invest with up to a further $50 million from Milford’s active growth fund.
Mr Bone said the co-investment meant it did not need a large institutional investor as a cornerstone in the latest fund and found good demand among its own customers.
A global environment of low interest rates had spurred the attraction of private equity. Investors were looking at different asset classes to deliver them returns when equity markets were already showing signs of being fully valued, he said.
The New Zealand Superannuation Fund said this week it planned to invest $260 million in three private equity funds targeting small and medium-sized businesses that had delivered above-average returns before.
Milford’s private equity II fund will invest $10 million to $20million in each company, which will include targeting firms seeking capital to expand overseas and local subsidiaries of large corporates, and helping with succession plans for founding shareholders. The open-ended fund’s investments would be medium- to long-term holds and any initial public offerings would not necessarily be used to exit an investment, Mr Bone said.
"We capped the size of the fund to $150 million — that enables us to invest $10-$20 million per investment," he said.
"We think that this is the right size for the New Zealand market."
Mr Bone said the fund would not target any specific sector, and Milford had spread its net far and wide in the past, including unlisted investments in AFT Pharmaceuticals, Orion Health, Volpara, New Zealand Guardian Trust and Coretex.
Milford’s private equity investment committee includes Mr Bone and Mr Johnston, who are joined by the fund manager’s principal, Brian Gaynor, former Schroders head Lester Gray and Milford’s deputy head of investments, Jonathan Windust.
Mr Bone said now the fund had raised its capital, he could expand the operational side of the team.
