Government announces six fund managers

The Government has announced six fund managers to take control of its seed capital fund and distribute money from it to innovative projects.

The Government has allocated $100 million for the Venture Investment Fund (VIF), which was announced in the last budget. The money will be ploughed into venture capital seed funds aimed at providing capital for university and crown research institute research projects and fledgling businesses.

The Government plans to attract around $200 million of private sector capital alongside its own investment, so that the Government contribution is as a minority investor in the seed funds established.

Research, Science and Technology Minister Pete Hodgson today announced six fund managers, chosen from 44, that showed interest.

They are:

* NZ Biotech Fund No. 1 Ltd -- based in Otago with a focus on agribiotech innovations. It is managed by Quest VC Ltd, whose directors include entrepreneur Howard Paterson.

* Endeavour I-Cap, associated with Neville Jordan -- the first New Zealander to list a company on the Nasdaq, MAS Technology -- and Dr David Teece, an expatriate kiwi investment leader based in San Francisco.

* IO Fund, a joint venture between Infratil, the listed New Zealand infrastructure investment company, and Orion New Zealand, the South Island electricity network management company.

* iGlobe Treasury Funds, a joint venture between an established Singaporean venture capital company with worldwide high tech investments, and New Zealand based merchant banker Tony Bishop.

* TMT Ventures, a venture capital fund seeded by Telecom New Zealand and managed by Direct Capital and US based private equity investor Advent International.

* No 8 Ventures 2002 Fund, an established venture capital fund manager with strong US links, focused on IT, electronics and biotechnology.

Mr Hodgson and fund chairman John Grant said the six had been chosen after extensive due diligence.

"I am delighted we are now so close to seeing the individual seed funds established. This money will back New Zealand's innovators," Mr Hodgson said.

"The world-class managers of these funds will bring expertise and capital to New Zealand's finance sector that will significantly improve the commercialisation of world-class New Zealand ideas."

Mr Grant said the response from venture managers had been impressive.

"As final terms are agreed with the prospective fund managers, VIF will announce the capital allocation to each fund," he said.

"This continues to be a competitive process, as we have more proposals for VIF capital than we have available to invest. It is anticipated that successful applicants will be fully operational within a few months."

Mr Hodgson said the Government had no plans to increase its investment in the fund, and Mr Grant expected to have most of the $100 million, with interest, returned within 10 years.

- NZPA