Morel & Co raises $20m for venture capital operation

By Yoke Har Lee

Wellington-based investment banker Morel & Co has raised $20 million from high net worth investors for a venture capital fund called No 8 Ventures.

It is confident of raising another $10 million in another two or three months' time through its fund managing company Morel Ventures.

The first investment to be made by No 8 Ventures will be $1 million this year and another $2 million next year into Tacit Group, a software developer providing financial institutions with systems to manage their information.

Jenny Morel and Peter Allport, directors of Morel Ventures, are confident they will get the next $10 million.

"We left [the closing date for the other amount] until September 30 because we know that if you rush people, there is only one easy answer," said Jenny Morel.

"A lot of the people we are trying to talk to are New Zealanders who are overseas. The sooner we can get it, the better. From my point of view, I just want to get on with the running of the fund."

The fund company will end up with 16 per cent of Tacit, which will use the $3 million injection to expand into Britain. Tacit already employs 100 people.

The Tacit investment will be for three to five years, Jenny Morel said, adding that within that time frame, she would be looking for an exit.

"We know [Tacit] reasonably well. They're a very exciting company in terms of the market niche they have chosen and the knowledge they have of the market in the insurance and banking industry.

"Jan [Hilder, who owns the company with her partner Murray Hilder] had a great vision in where the industry needed to go with its systems, which is way ahead of everybody else's vision. They invested in that back in 1994 and designed a whole new suite of product for the financial services sector in a new way."

Murray Hilder said Tacit's turnover was targeted at $20 million for the financial year ended March 2000, against $7.5 million for March 1999 and $4 million for 1998.

The American Bankers Journal described Tacit as having started an Australasian trend in providing mid-range price systems for financial institutions managing their businesses on an integrated basis.

Mr Hilder said the company's current competitors were those offering product-based systems; for example a product dedicated to life insurance product management. Tacit provides a system-enabling data to be culled from each transactional system for warehousing or consolidation.

This meant financial institutions selling different products could administer, track and manage their information across a wide range of products, be they life insurance or unit trust or superannuation products.

Tacit's Talisman family of software administers products designed for life insurance, health insurance, fire and general insurance, corporate superannuation and unit trust registry among others.

Tacit started life as a company providing actuarial consultancy but its IT operation has overtaken the original business.