Capital Markets: Quentin Quin: Shifting business out of the comfort zone

Quentin Quin, General Manager Capital, New Zealand Trade and Enterprise.

The Better by Capital programme has accelerated the ability of companies to access alternative capital markets, improved their capacity to be "match fit" when sourcing new capital, and shifted their marketability away from traditional "vanilla" type financial structures to support growth.

The deep dive process shifts a business' comfort zone and provides scope to reprioritise activities for growth and take advantage of broader networks or strategic capital, for example partnering with a large multinational that can enhance internationalisation.

The Better by Capital team is currently working with 42 companies to assess their financial bandwidth and forecasted requirements. A further 35 companies are in the final preparation stage of meeting investors - including 22 firms who are using NZTE's international investment network to action their capital-raising strategies.

Twelve companies have achieved their financial goals and $10.4 million has been invested or reprioritised across seven companies to achieve or accelerate internationalisation.

Capital has been mobilised by leveraging both domestic and international networks, and using a range of tools including debt and equity. Another five companies have a capital development plan that underwrites their future sustainability.

Over the past 10 months we have delivered 70 "Challenge Workshops", in which a company's management or directors are challenged on their growth, marketing and investment strategy by private sector advisors.

Twenty companies have participated in "Ready Set Grow" sessions - interactive seminars that provide the opportunity for companies to learn about capital fundamentals from a range of internal and external advisors. We have learned we can achieve better results by asking people from the outset, "How big could your business be if you removed other constraints?"

We started doing this because time and time again we saw companies whose aspirations, capability and vision were constrained because they lacked a commercial framework that laid out their business plan, resulting in external parties defining the parameters in which they could operate. When people thought about what success looked like to them, their load lifted and it was easier to consider scale, strategy, growth, internalisation and capital requirements. This resulted in a more focused approach when addressing a range of capital issues, including succession planning, debt-raising, shareholder structures and structured exits. This is a positive outcome - more companies going into markets in a more controlled way creates a more sustainable investment ecosystem.

If major international investors see a constant, credible source of innovation, deals and opportunities coming from New Zealand, New Zealand becomes a market of interest for strategic foreign capital. This opens up the world for the next generation of New Zealand entrepreneurs, and the recycling of capital from one good investment to an entrepreneur looking to deploy the gains to another.

There has been discussion previously about the need for increased capital flow to boost exports. With this in mind, it is encouraging to note that the profile of capital providers is also changing, with NZTE receiving a lot more interest from high net worth individuals from across New Zealand looking to expand or divest their investment opportunities and build out their exposures or portfolio.

In addition to strong corporate interest from China we are also seeing increased interest from Australia, Britain, the Middle East, North America and Southeast Asia.

Better by Capital

• Administered by NZTE
• Private sector partners
• Launched July 2103.
• 215 businesses participated
• 12 companies achieved financial goals

• Quentin Quin is General Manager Capital, New Zealand Trade and Enterprise (NZTE).