9 January 2012
Direct Capital, through its Direct Capital IV and Pohutukawa II funds, today announced that it had completed an investment in Hiway Group Limited, New Zealand’s leading provider of specialist roading and ground stabilisation services.
Hiway Group is the family business of Peter Boocock and his sons, John and Paul. The investment by Direct Capital is to fund the sell-down by Peter Boocock of his shareholding. Following the acquisition Direct Capital will join John and Paul Boocock and existing management as shareholders in the business.
Hiway Group has a long and successful history dating back to its establishment in 1982. The company has led the way in introducing modern techniques and specialist equipment used in stabilising the ground works associated with road construction and civil works. Hiway Group operates through two main operating companies, Hiway Stabilizers and Hiway GeoTechnical deploying a number of specialist technologies including deep soil mixing, soil nailing, aggregate modification, sub-grade stabilisation, fill drying and foamed bitumen recycling. The company also offers a number of environmental contracting services including soil recycling and site remediation.
Facilitating the change of ownership from Peter to his sons and management team is a typical example of the investment that Direct Capital makes in the private company sector.
“Private company owners have generally spent their careers establishing and growing their business”, commented Direct Capital’s Simon Plowman. “When it comes time to think about freeing up capital and spending more time with family and pursuing other interests, selling the business to your management team is a great option and it’s usually the easiest path to take.”
For John and Paul Boocock, bringing in Direct Capital as a partner to facilitate the sell-down by Peter was an easy decision to make.
“Paul and I have been in the business from the beginning and our management team has been together a long time. We understand the business and will continue the culture and long-standing relationships that we’ve built up over the last 30 years.”, said John. “It’s been great to have been able to sell Peter’s shareholding while continuing our ownership and management of the business and to continue its long record of success.”
With significant reconstruction activities ahead in Christchurch and Queensland as a result of the earthquakes and flooding experienced through the last year, and the ongoing general investment in roading infrastructure in both New Zealand and Australia, the growth potential for Hiway Group is clear.
The investment in Hiway Group is the sixth investment from the Direct Capital IV fund which raised $325 million in 2009 for investment into private companies.
For further information on Hiway Group’s operations please see their website: www.hiwaystabilizers.co.nz
John Boocock, Managing Director, Hiway Group
+64 21 941 034
Simon Plowman, Direct Capital Investments Limited
+64 21 489 027
15 September 2011
Pohutukawa II has today announced its fifth investment into PF Olsen Group Limited. Pohutukawa II and Direct Capital IV have acquired a 30% shareholding in PF Olsen Group Limited, one of Australasia’s largest providers of professional forestry services.
The remaining 70% of the Company’s shareholding continues to be held by management, led by chief executive, Peter Clark, and employees. Direct Capital’s Bill Kermode will join the PF Olsen board.
Employee ownership is strongly supported by Direct Capital and it is consistent with one of its core beliefs – that where shareholders, management and employees are aligned through their ownership interest, companies outperform their peers.
PF Olsen manages over 170,000 hectares of plantation forests and harvesting planning for more than 3.6 million tonnes of logs annually. As a part of its service offering, the Company provides forestry management, harvesting planning and engineering, seed and containerised seedling sales from company-owned and leased orchards and nurseries, and advisory services. PF Olsen contracts out the physical harvesting and tending operations to third parties. The Company’s forestry clients include timber investment management organizations (‘TIMOs), local forestry investors, government agencies, and corporate forest owners.
Based in Rotorua the Company employs 113 staff operating out of 15 offices across New Zealand and Australia. The Company’s trans-Tasman operations and growth opportunities are a key feature that attracted Direct Capital to the investment.
“In the private company market we see a number of successful businesses that benefit from a broader market exposure across different economies. PF Olsen is well-established in Australia and has significant growth opportunities with increasing harvestable wood volumes and investment in carbon forestry,” said Mr Kermode. “With the benefit of its long history in the New Zealand forestry sector, PF Olsen is well-placed to service its growing client base in Australia”.
Mr Clark welcomed the investment from Direct Capital. “We are looking forward to working with a local partner who can bring a shareholder-based perspective to our business and has the capital base to help us act on the opportunities we have and continue the strong growth we’ve enjoyed over a number of years”.
The investment in PF Olsen is the fifth investment from the Pohutukawa II fund which raised $82.5 million in 2009 for investment into private companies.
3 May 2011
Pohutukawa II has announced its fourth portfolio company investment. Pohutukawa II and Direct Capital IV, together with co-investment from New Zealand Superannuation and Accident Compensation Corporation, have conditionally acquired a majority shareholding in Scales Corporation Limited (“Scales”), a leading New Zealand horticultural and primary processing, exporter and logistics business.
The combined equity stake to be acquired will be 79.7% of which Pohutukawa II’s shareholding will be 8.7%.
Operating through a number of distinct divisions the company has a long and successful history of operating in New Zealand. Mr Apple is the largest grower, packer and exporter of apples in New Zealand. Meateor Foods exports processed meat that is used in the world’s leading pet food brands. Scales’ service businesses include New Zealand’s largest cold store network, a bulk liquids storage business and a logistics business.
Direct Capital has acquired the majority interest in Scales through the receivership of South Canterbury Finance Limited, which was placed in receivership in August 2010.
The investment by Direct Capital is a strong endorsement of the New Zealand primary agriculture industry.
“Direct Capital as a new positive shareholder with a significant capital base will provide Scales certainty in moving forward with its plans to develop and grow the Company” says Scales CEO Andy Borland.
The investment in Scales is the fourth investment from Pohutukawa II, which raised $82.5 million in February 2009 for investment into New Zealand private companies. The investment into Scales is subject to a number of conditions, including a Scales’ shareholder vote, and is not expected to settle before early July 2011. The investment will be initially funded through a drawdown of existing short-term bank facilities.
As the Manager is currently also assessing other investment opportunities which may impact the amount of the cash call, the amount and date of the call will be advised later. If both additional investments go ahead the shareholder call could be as much as 20 cents per share.
A further update including the date and quantum of the call will be provided at the Annual Shareholders Meeting on the 17th May 2011.
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.
Date 10 June 2010
Capital injection set to launch Bayleys on expansion path
Leading New Zealand real estate agency and professional property services provider Bayley Corporation Limited (“Bayleys”) has this week successfully completed the first stage of a major expansion programme which will see the company significantly increase the scope and scale of its operations throughout New Zealand.
“To support this continued growth, Bayleys has brought in a new shareholder, Direct Capital, to invest a minority shareholding in the business.
The growth programme will be based around increasing the scope and depth of agency services Bayleys provides for its clients throughout New Zealand – particularly in property management, valuation services and funds management.
Bayley Corporation managing director Mike Bayley said this expansion had already commenced with the growth of the company’s valuations team in Wellington, and increasing turnover from the firm’s steadily developing commercial property management group.
“The board of Bayleys and I are excited about the future growth opportunities that we have. The capital that comes from our new partnership with Direct Capital will help us act on these opportunities,” Mr Bayley said.
Direct Capital is a well known investor in private companies having invested in 36 companies since its first fund was raised in 1994. The investment in Bayleys will be from its latest funds, Direct Capital IV and Pohutukawa Private Equity II, which combined, raised $325m during 2009..
Direct Capital invests into private companies to provide the capital to grow and continue creating value. Direct Capital has invested in such companies as Fishpond, New Zealand King Salmon, GoBus, Shears & Mac4, Rodd & Gunn, Stratex, EziBuy, Ryman Healthcare, and Max Fashions.
The investment from Direct Capital will be used exclusively for expansion initiatives across those companies coming under the Bayley Corporation umbrella – most notably Bayleys Realty Group, Bayleys Property Services, Bayleys Valuations and Consultancy, and Bayleys Real Estate agency operations.
“Bayleys is a company that Direct Capital has followed over a number of years, and a company that has continued to perform exceedingly well through this cycle - confirming the strength of its brand, outstanding management, and market position in New Zealand,” said managing director for Direct Capital, Ross George.
The professional property management and services sector is a significant part of the economy and Bayleys is fast emerging as the leading service provider within this market.
“Our investment in Bayleys not only provides the capital to fund the company’s continuing growth but it also broadens the shareholder base from the family to include institutional capital - an important feature of Bayley’s longer term plans,” Mr George said.
The Bayleys family will continue to be the majority owners of the company and its existing board will be joined by Mr George.
Mike Bayley said “the real estate agency and professional property services markets would see a growing Bayleys presence across the wider property sectors – truly enhancing the company’s brand promise of being New Zealand’s leading full-service real estate agency.”
”There would be no change to the day-to-day operations of the company other than staff and clients would begin to see a wider range of product and services being offered by the company - all of which would significantly enhance Bayleys’ current offerings.
For further information on the investment of Pohutukawa Private Equity II into Bayley Corporation Ltd, contact Direct Capital investment director Gavin Lonergan, telephone 09 307-2562
Direct Capital & Pohutukawa Invest in Transaction Services Limited
29 January 2010
Direct Capital, through its Direct Capital IV and Pohutukawa II funds, has invested $24 million to acquire a 49%, interest in Transaction Services Limited, Australasia’s largest third party recurring payment processing company.
Pohutukawa’s stake in Transaction Services is $5.7 million, or 11.6% of the company.
This investment represents close to 7 cents per share of Pohutukawa shareholders’ capital. Pohutukawa has sufficient cash available to meet its settlement obligation, so no additional funds will be called from shareholders at this time.
Operating under the brands Debitsuccess and FFA Paysmart, Transaction Services manages the payment processing function for clients in a wide range of industries including health and fitness facilities, sports clubs, property management companies, maintenance providers, home service providers, and insurance companies.
The Transaction Services model allows its clients customers to pay for goods or services on any frequency and over any time period, giving them the ability to match their cash flow with their payment commitments, without the penalty of incurring interest costs.
As a part of its service offering the group companies include a debt collection service and a call centre to handle customer queries relating to their financial contractual relationship with their suppliers.
As a combined offering the companies clients experience considerable cost savings when outsourcing this component of their business, freeing up their time to deal with other aspects of their businesses.
The company recently launched its Online Management Gateway product which allows businesses to incorporate a direct debit facility into their websites, offering greater flexibility in the way online payments are completed.
The investment in Transaction Services is the first investment from the Direct Capital IV and Pohutukawa II funds, both of which completed fund raising in 2009. Combined, the funds raised $325 million, well above the firm’s initial target of $250 million.
“When we launched Direct Capital IV we were conscious that the fund raising environment was very difficult”, commented managing director, Ross George. “But we were confident that our investors understood that the next three to four years would be an exceptional period for investing in private companies as the economy emerges from recession”.
“In good economic periods it’s expensive for companies to grow market share but in tough economic conditions market share is well and truly up for grabs. Companies that are well-capitalised have a unique opportunity to grow in this market and we can provide that capital”.
“Direct Capital IV will be a continuation of what we have been doing for 15 years now, investing in well-established private companies and providing them capital to grow, facilitating a change of ownership from an older owner to their management, funding an acquisition of complementary business, or investing in and helping a company through to a share market listing.”
With an impressive track record, Transaction Services is an ideal investment for Direct Capital IV and Pohutukawa . Transaction Services was established in 1994 and annually processes more than 13 million transactions on behalf of over 2000 clients, from their 500,000 customers in New Zealand and Australia.
Of the investment by Direct Capital, Transaction Services’ managing director Allan Dickinson commented “Transaction Services has achieved excellent growth over the last five years and looks forward to continuing that growth with Direct Capital as a shareholder”
10 February 2014
We are pleased to confirm Pohutukawa Private Equity II’s seventh investment.
Direct Capital IV together with Pohutukawa Private Equity II has announced the completion of an investment in Taranaki-based, Energyworks Limited, New Zealand’s leading provider of mechanical services to the onshore oil and gas, power generation and petrochemical industry.
Direct Capital IV and Pohutukawa II have acquired a 70% shareholding in the company. Pohutukawa II’s shareholding is 16.7%. Pohutukawa II has funded this significant investment using existing cash resources and our bank facility.
Future Call 10c
To cover the funding for this investment, Pohutukawa II directors have resolved to make a further call on shareholders for 10 cents per share. A call notice will be issued on 25 March 2014 and will be due 24 April 2014. Pohutukawa II shares are currently paid to 47 cents, so this call will take paid up capital to 57 cents per share.
Please read the full media release below.
10 February 2014
Direct Capital IV together with Pohutukawa Private Equity II today announced that it had completed an investment in Taranaki-based, Energyworks Limited, New Zealand’s leading provider of mechanical services to the onshore oil and gas, power generation and petrochemical industry.
The investment is alongside the existing owners, managing director, Dallas Chadwick and chief executive, Allen Clarke, both of whom will continue to be significant shareholders in the company and continue to manage the business. Direct Capital’s Mark Hutton will join the Energyworks board and an independent director is expected to be appointed.
Established in 1972 the company employs more than 200 specialist engineering staff and is one of the largest service providers to clients across the oil and gas, power generation, and petrochemical industries, with the onshore gas sector representing the bulk of its revenue base.
Taranaki is New Zealand’s energy province and home to the nation’s oil and natural gas production. The combination of New Zealand’s harsh coastal environment, client and statutory requirements around maintenance of plant and equipment provides Energyworks a solid base of recurring maintenance and shutdown work. The company also provides facility modification, expansion and greenfield services, constructing everything from oil and gas gathering pipelines through to production stations, export pipelines, metering stations, power stations and storage facilities. In January, the company also expanded its industrial coatings division, commissioning a new purpose-built 2500 m2 facility for blasting, coating and storage.
“Allen and I are pleased to be partnering with Direct Capital in the business,” commented Dallas Chadwick. “The business is continuing to grow and our capital base needs to be able to grow with it. We also have an important role in our local community here in Taranaki and bringing in a partner that is like-minded was also critical.”
For Direct Capital, the investment in Energyworks represents the seventh investment from its Direct Capital IV / Pohutukawa II fund, which raised $325 million in 2009 to invest in private companies. The firm invests alongside owners and managers of successful private companies looking to fund growth, expand into Australia, plan succession, or simply provide a more flexible capital structure for growth companies.
2014 sees Direct Capital celebrating its 20th anniversary and the investment in Energyworks continues an investment approach that has been consistent since the firm began in 1994.
“Investing in successful privately owned companies looking to grow, and doing so alongside management who are also owners in the business, and therefore focussed on creating shareholder value, has been the strategy we started with in 1994,” said Direct Capital’s Mark Hutton. “Our approach remains the same today because it works and the success of our companies such as Ryman Healthcare, PC Direct, Eftpos New Zealand, EziBuy, Express Logistics, GoBus demonstrate a track record of success over a very long time.”
“Energyworks offers many of the same attributes, the company is well-established, it’s the leading provider within its sector, the sector offers a lot of growth independent of oil exploration activities, and the management team has proven to be highly capable,” continued Mr Hutton.
While there won’t be any operational changes, the strategic focus for the company includes establishing longer-term maintenance contracts with clients, increasing the range of engineering services provided and expanding to new geographies.