The 2014 New Zealand Private Equity and Venture Capital Association (NZVCA) Deal of the Year Award has gone to Direct Capital for its investment in Scales Corporation.
The NZVCA Deal of the Year Award recognises outstanding performance in the private equity industry and was announced at the NZVCA 2014 annual conference in Queenstown today (23 October).
NZVCA Executive Director Colin McKinnon says: `The Direct Capital investment in Scales Corporation is an example of innovation, growth, and excellent returns on investment that benefit investors, who are generally local and international superannuation and pension fund members.’
Entries were judged on return to investors and the company's financial performance. The company's contribution to the economy, employment, innovation, consistency and industry competitiveness was also taken into account.
Mr McKinnon adds:‘The winner of our 2014 award is an example of the purpose and aim of private equity: to partner with companies to provide the capital to grow and create value and long-term sustainability through aligning the interests of owners and management. This ultimately delivers improved productivity, creates jobs and contributes to the national economy.’
Scales is a large, diverse and growing agribusiness group.The company is exposed to the key primary industry sectors in New Zealand across its three operating divisions: Horticulture, Storage & Logistics and Food Ingredients. Scales was founded in 1897 as a shipping business by George Herbert Scales. Today it employs more than 450 staff New Zealand wide.
In June 2011 the Direct Capital IV Fund together with co-investors NZ Super Fund and ACC and others, acquired a 79% shareholding in Scales Corporation from the Statutory Manager of South Canterbury Finance in a competitive tender process. In conjunction with its investment, Direct Capital’s Mark Hutton and Tony Batterton joined the Scales board. Jon Mayson was elected to the Board as Chairman, having previously been the CEO of the Port of Tauranga and Chairman of New Zealand Trade and Enterprise among other roles. Andy Boland, who had joined Scales in 2007 after a 20 year career in banking, became Managing Director.
Direct Capital Director Tony Batterton notes: ‘In the first three years of Direct Capital’s majority ownership, the company invested around $50m of capital in re-developing orchards to Asian preferred apple varieties,to enhance and expand various storage and manufacturing plants and to complete a number of other significant growth initiatives. Scales more than doubled profit before tax during this period and achieved a significant reduction in the level of debt enabling the company to recommence dividend distributions from 2013.’
In July 2014 Scales completed its listing on NZX, with Direct Capital selling down to a post-IPO shareholding of 20%. Scales also raised $30m of new capital in the IPO. Direct Capital retains one board directorship position.