Investment manager Milford Asset Management is looking to raise up to $100 million to launch a new $150m private equity fund.
The Milford Private Equity Fund II will invest the money it raises in between six to 10 companies which are two to three years away from a sharemarket listing and may also invest in listed companies.
John Johnston, a Milford investment director who will manage the fund alongside Brooke Bone, said the driver for setting it up was to help bring more companies into the listed space.
It will target established businesses with a turnover of between $20m and $200m.
Bone said figures from Statistics New Zealand showed there were around 2500 businesses in New Zealand that fit the turnover criteria.
"There is quite a big set there but it narrows down further when you look at which ones the listed market would like."
The fund will aim to invest the money over the next three to five years with a target of 20 per cent pre-tax compound annual return.
Milford's Active Growth Fund will co-invest $50m with the private equity fund and Milford's own investment team are putting up $6m of their money to put into the fund.
Johnston said it already had a pipeline of opportunities lined up through research undertaken while making previous private equity investments.
Its previous investments include Orion Healthcare, AFT Pharmaceuticals and Volpara which have since listed on the New Zealand and Australian stock exchanges.
Johnston said the New Zealand sharemarket only represented 50 per cent of the country's GDP while Australia's share market represented around 100 per cent.
"There are a huge opportunity - the New Zealand market needs to grow."
The fund raising closes on December 16 and is only open to wholesale clients and experienced investors with a minimum investment of $100,000.