$500k to invest in rural fund

A new investment fund could pump millions into ambitious rural businesses.

The Central Capital Regional Fund is planning to raise $50 million during the next year to invest in high-growth central North Island companies outside Auckland and Wellington.

It is targeted at high net-worth individuals and institutions, with a minimum investment of $500,000.

The fund - the idea of Hamilton businessmen Gary Mollard and John Birch - was set up to fill a gap in the market for investment in companies servicing the primary sector and other heartland industries.

"The primary sector is going through a growth phase," Birch said.

"However, many of the companies servicing this sector are now financially challenged to keep up with their customers and fund their own growth. Additionally, many owners require additional strategic or operational skills to deliver on the potential available to them."

New Zealand's rural heartland was an opportunity overlooked by most traditional investors, Mollard said.

"The central North Island has a number of strong, attractive businesses across a range of industries, however they have been under the radar to Wellington, Auckland and Australian-based private equity firms," he said.

Central Capital Management chief executive Rory MacGillycuddy said it was not specifically an agricultural or primary sector fund but typically the companies within the region serviced that sector. "So it could well be agricultural supplies or services into the sector but we're specifically excluding property, retail and hospitality."

Target investment companies could include firms that provide services to factories, machinery manufacturers and technology providers.

The fund would invest between about $2 million and $6 million in companies with turnover of about $10 million plus, and take stakes of between 20-100 per cent.

The fund would make medium- to long-term investments and planned to support existing owners. It aims to raise about $25 million by October and make eight to 12 investments within the next five years.