JUNO INVESTING ©

Quentin Quin

JUNO INVESTING ©
Quentin Quin

 

WINTER 2016

General Manager, Capital, at New Zealand Trade and Enterprise (NZTE), the Government’s international business development agency.

What attracted you to the position at NZTE?

The appeal of the job was threefold, as I was returning from a role overseas. It was the opportunity to stay in the global investment world and the excitement of leading a team of investment professionals showcasing New Zealand companies internationally. But most importantly, it was about making a contribution to New Zealand by working with companies that are aspirational in either growing or going global.

How does the Capital team at NZTE help New Zealand businesses?

In a nutshell, we help companies access the right type of investment for their business at the right time.

We source investment that can really transform businesses by allowing them to grow internationally. We help companies identify what they can use investment for and then we get them ‘capital-ready’. This includes helping them prepare to pitch to potential investors.

We have a team of about 40 investment specialists, half of whom are based overseas. These specialists cover six different international regions. They have excellent local networks, which they use to identify domestic and foreign investors looking for opportunities. 

We offer a complementary service to private investment advisory firms – we don’t offer corporate finance or transaction advice, but we do connect our customers with professional advisers who can help.

What are the main benefits for companies that secure capital for their businesses?

The biggest benefit of raising capital is that it enables a company to grow – by launching into new overseas markets or expanding their current operations. This in turn contributes to the New Zealand economy. At NZTE, we talk about ‘catalytic’ capital or investment, because it really can transform a company.

A lack of capital is a major constraint on growth and most companies cannot fund this growth themselves. Small and medium-sized businesses need capital for a variety of reasons. For example, they may be looking to buy new equipment, open a new business, restructure, or refinance existing debt. A shortage of working capital can make it difficult to realise their vision, and it slows the rate at which their business can grow.

What impact does capital-raising have on the New Zealand economy?

Increasing the amount invested in New Zealand’s businesses enables them to scale up their efforts. This is central to growing the economy and reaching the government’s target of raising exports to 40 per cent of Gross Domestic Product (GDP) by 2025.

For example, last financial year, we deployed NZ$866 million of capital. This year we’re aiming to hit
NZ$1.3 billion. Impressive as those figures may sound, what’s important to us is the direct economic impact. Last year, the economy gained NZ$1.45 billion from that investment in terms of employment, earnings, tax and so on. And this year, it’s likely to be NZ$1.9 billion.

What options do New Zealand businesses have when it comes to attracting investment? 

Capital can come from different sources, including family and friends, bank loans, angel investors, venture capitalists, high-net-worth individuals, and private equity. 

We have a great network of angel investors in New Zealand – those who typically invest up to NZ$1 million of their own money and prefer start-ups. But we have a shortage of venture capitalist and private equity firms, which tend to invest much larger amounts over a sustained period of time.

New Zealand is a relatively small market with limited funds for investment. Our international networks provide a crucial link in accessing funding from much larger, overseas markets.

What mistakes do you see from companies when they are seeking investment?

Most New Zealand companies have no prior experience of raising capital and what the best approach is, or what they need to do to be an attractive investment opportunity.

We work with these companies to help them understand the capital-raising process, and define their unique value proposition or selling point. We also prepare them for the rather daunting task of pitching their company to a roomful of potential investors.

True alignment between the investor and the investee entity is important: it’s about access to investment from the right source, at the right time, and for the right reason.

How does NZTE Capital attract foreign investment into New Zealand?

Part of our role is to help potential investors take advantage of opportunities in New Zealand. We work with local government and organisations around the country to direct investors towards the regions where opportunities are strongest and the need is greatest.

We derive the biggest impact from attracting investment into sectors where New Zealand can be globally competitive – such as primary production, high-value manufacturing, and information and communications technology. We do this in a number of ways. 

For example, we might help a business relocate here or scope potential sites for development. We’re currently working with other government agencies to find some international investors keen to build new hotels in centres like Auckland and Queenstown. 

Visitor numbers are forecast to increase in those areas, where we already have high occupancy rates. So new hotel developments will help unlock the constraint on tourism growth in the future. Our role is to package the opportunity (potential sites, financial models, and forecasts) and sell that to overseas investors, using our networks and contacts.