Direct Capital Passes $1 Billion for Private Company Investment

Leading private company investor Direct Capital is on the lookout for new investment opportunities, following the successful close of its most recent fund, Direct Capital V.

The $375 million committed to Direct Capital V means Direct Capital has raised $1.2 billion to invest on behalf of its institutional clients since the company was established in 1994.

Managing Director Ross George says the new fund will again focus on companies with annual revenues of between $50 million and $350+ million that are looking for fresh capital to fund growth or to manage a change in ownership.

“The success we have had to date, both for our investors and for the companies in which we have invested, demonstrates the considerable potential that exists among companies of this type,” says Mr George.

Mr George said a strong relationship between Direct Capital and its partner shareholders was crucial.

“Private companies are typically family owned or owned by a small number of shareholders.  Introducing a new partner into a business to fund growth or a change in ownership is a big decision; shareholders need to evaluate their opportunities and find a partner they are comfortable with,” says Mr George. 

“And given that Direct Capital invests for the long term, it’s important we understand the business and can work alongside the existing owners.”  

Mr George says a successful partnership is about more than money.

“For example, many of the companies Direct Capital gets involved with are looking to expand into new markets, such as Australia. A partner who can offer experience in managing shareholder change and business growth, as well as providing fresh capital, is very valuable.”

Mr George said Direct Capital’s singular focus on private company investment had played a big part in its success.

“We’re not brokers or advisors, we don’t have a variety of competing mandates: all we do is private company investment – and over the past 23 years we have built a name for doing it very well.”

Companies backed by Direct Capital’s most recent previous funds, Direct Capital III and Direct Capital IV, increased aggregate revenue from some $1.0 billion to more than $1.5 billion and increased total employees by 42 percent to more than 5,000.

Direct Capital has worked with some of New Zealand’s best-known and most successful businesses, including the now-NZX-listed Ryman Healthcare, Scales Corporation and New Zealand King Salmon; leading realtor Bayleys; and transport operator GoBus.

Direct Capital V’s executive team includes newly-appointed partner Heath Kerr, who was until recently the firm’s Australian representative. Mr Kerr has 20 years’ experience in investment banking and private equity in Australia and New Zealand.