Originally published in the New Zealand Herald
Tim McCready breaks down the numbers in EY’s investment report.
The annual EY Private Equity & Venture Capital Monitor was released this month, and was characterised by a record level of overall activity of $1.7b in the year to 31 December 2018.
This was an increase of $709.3m from 2017’s $989.6m, and significantly above the $870.2m average since the survey began in 2003.
Total investment activity in 2018 was $1.1b, spread across 62 deals. This was up $218m from 2017, driven by a higher average deal value in 2018 ($17.6m) compared to 2017 ($12.9m).
“The Monitor illustrates the availability of private capital in New Zealand remains healthy, with renewed interest in early stage investing and continued strong activity in the mid-market investment space.”
Mid-market investment activity
Mid-market investment activity remained buoyant in 2018, resulting in $245.0m in investments, though this was down on 2017’s record high of $333.7m. Average investment value decreased from $19.6m in 2017 to $12.9m in 2018, a return to the longer-term average trend.
Mid-market transactions in 2018 included investments by New Zealand domiciled funds including Direct Capital, Maui Capital, Milford Private Equity, Pencarrow Private Equity, Pioneer Capital, Oriens Capital and Waterman Capital. There was also an increased level of activity from funds outside Oceania.
Divestments in the mid-market showed an increase from 2017, primarily driven by transactions of Australian funds. “The sector continues to be a strong performer with more than $1.9 billion invested in the past decade and $976 million returned to investors to date,” says Frankham.