By Keith Newman
Auckland-based high-tech investment house IT Capital has acquired a stake in a top entertainment industry Web site with several US investment giants.
IT Capital has put up $1 million and partnered with US venture capital firm Forest Brinkley & Brown, Goldman Sachs, Mellon Ventures and William Simon & Sons
to acquire the music industry portal.
The move comes as IT Capital, formerly Iddison, is about to list on the Australian Stock Exchange.
"Behind books, music is the fastest growing category for consumers to purchase over the Internet and that's a good value proposition," said IT Capital director John O'Hara.
He said a non-disclosure agreement meant he couldn't name the site yet.
"It's a well-known hub containing the Web's largest collection of music content, personalised tools for music discovery and genre specific programming and content developed in collaboration with music industry publishers."
Jeff Dittus, IT Capital's vice-president of investments, was in the US talking with venture capital companies when the opportunity to invest in the music portal came about.
"We looked at it carefully and did a huge amount of due diligence and felt it was a great investment in its own right and a good way to establish relationships with companies that ultimately may help New Zealand firms move into the US market,"Mr O'Hara said.
He said IT Capital had turned down a couple of investment opportunities but was actively looking at New Zealand-based investment, including two software companies.
"Ultimately software is where the value is. We will focus on taking Australasian companies into the international market, but to be successful we've got to take some New Zealand companies to the US and build relationships and contacts which will lead to other things."
Mr O'Hara, now a director of exonet, the software and e-commerce company headed by PC Direct founder Maurice Bryham, said New Zealand produced "Rolls Royce class software" but was let down by poor marketing. IT Capital recently acquired a 20 per cent stake in exonet with an $857,000 investment designed to gear the company up for international markets.
