Venture fund gets more Govt backing

Franceska Banga says the new facility is timely and welcome. Photo / Supplied

The Government is backing the New Zealand Venture Investment Fund with a further $60 million as part of its efforts to encourage more private investment.

The latest injection follows a previous $40 million underwrite and is on top of the $160 million the Government has already allocated to the venture capital programme.

"The underwrite facility is a contingent liability rather than an upfront sum," said Economic Development Minister Steven Joyce.

"It provides the flexibility so that NZVIF can continue to make commitments into new venture capital funds and then use future cash flows from existing investments to meet those commitments."

NZVIF was set up by the Government in 2002 as a private equity fund of funds investor, with about $200 million under management, made up of the $160 million Venture Capital Fund of Funds and the $40 million Seed Co-investment Fund.

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So far it has invested $117 million in 126 companies which have gone on to raise total investment capital of $700 million, generated revenue of $1.25 billion and export earnings of $945 million. Notables include Orion Health, SLI Systems, PowerbyProxi, Booktrack, BioVittoria and Zephyr Technology.

"Capital markets are the growth engine for the economy but some parts can be strengthened," Joyce said.

NZVIF chief executive Franceska Banga said the new underwrite facility was unlikely to be called upon, but it was timely and welcome.

"It enables us to progress with new investment partnerships, like the recently announced co-fund partnership with Taiwan's National Development Fund," Banga said.

"We expect to see two to three new funds beginning the capital-raising process over the next three or four years which, if established, will help the flow of growth capital for start-up companies."

NZVIF now had the capacity to make investment commitments up to $300 million.