Pohutukawa II Invests in Cavalier Wool Holdings Limited

24 December 2010

Pohutukawa II has announced its third portfolio company investment. Pohutukawa II and Direct Capital IV, have acquired a minority shareholding in Cavalier Wool Holdings Limited (“CWH”), New Zealand’s largest wool scouring company and a large service provider to New Zealand’s wool industry.

The combined Pohutukawa II and Direct Capital equity stake in CWH is 25% of which Pohutukawa II’s shareholding will be 6.0%.

Operating through its trading subsidiaries, Napier based Hawkes Bay Woolscourers and Timaru based Canterbury Woolscourers, CWH cleans and processes greasy wool for domestic and export markets on behalf of New Zealand wool buyers and carpet manufacturers.

Direct Capital joins existing shareholders, NZSX-listed carpet manufacturer Cavalier Corporation Limited and ACC.  The current board, comprising David Ferrier, Cavalier’s Wayne Chung and Victor Tan, and ACC’s representative Martin Goldfinch, will be expanded to include Direct Capital’s representative Ross George. 

The investment by Direct Capital is a strong endorsement of the New Zealand wool industry which produces more than 25% of the world’s “strong wool” fibre.  Cavalier Wool Holdings is a large operation by international standards and a global leader in its sector.  It is also one of the world’s largest producers of wool grease, a by-product which is further refined to produce lanolin, an ingredient with growing demand for use in cosmetics and pharmaceutical products.        

“We were particularly attracted to Cavalier Wool Holdings as it is a critical service provider to New Zealand’s wool industry which is set to benefit from growing demand for natural, sustainable wool fibre products.  CWH is the only independent scourer in New Zealand, it has an exceptional management team, and has excellent long-standing relationships with wool buyers and exporters.” said Direct Capital’s Ross George. 

There will be no operational changes to the company but with the addition of Direct Capital as a shareholder, the company is well-placed to continue funding its growth initiatives in both scouring and wool grease extraction. 

The investment in Cavalier Wool Holdings is the third investment from Pohutukawa II, which raised $82.5 million in February 2009 for investment into New Zealand private companies. The investment into CWH has been funded from existing cash balances. With the approval of the Manager, Pohutukawa II will not make an additional call at this time, although a new cash call will be required to fund the next investment.  The next cash call is not expected to be payable by Pohutukawa II shareholders during the first quarter of 2011.