Pencarrow Bridge Fund
Pencarrow Bridge Fund is a NZ$80 Million small-mid market expansion and buyout fund, managed by Wellington, New Zealand headquartered Pencarrow Private Equity. The Bridge Fund is designed to be a concentrated portfolio across two to four investments to ensure opportunities are captured while Pencarrow prepare for the launch of their next fund, Pencarrow V in 2017.
Pencarrow is the longest established private equity manager in New Zealand. Since 1993 they have invested more than $300 million of equity capital into 31 companies.
Pencarrow has a long established focus on Management Buyouts (MBO’s), expansion capital and replacement capital investments in businesses with enterprise values in the range of NZ$20 million to NZ$100 million that have strong management teams, attractive positions in their markets and the opportunity to create significant value.
The Pencarrow Bridge Fund has completed four investments to date; MMC Ltd, MIX , Netlogix Group Holdings Ltd and The Collective.
MMC Ltd. In November 2016, Pencarrow Bridge Fund acquired 50% of MMC, a leading New Zealand fund and investment administration business. MMC was incorporated in 2002 by founders Robert Moss and Tom Reiher and has experienced significant growth since then, from its core service offerings of fund accounting and unit pricing.
The company uses an internally developed technology platform that is adaptable for regulatory changes, new services and organic growth into new geographic regions. As a result of its quality service offering MMC has achieved high client retention rates whereby it currently services 26 clients (including BT Funds Management New Zealand & Westpac) with over $NZ27.5 billion of client’s funds under administration.
During January 2022, Pencarrow Bridge Fund announced the sale of MMC Ltd to Apex Group a global financial services provider with over 50 offices worldwide and 8,000 plus employees.
Pencarrow acquired MMC in November 2016 alongside founder Robert Moss and Tom Reiher. Across Pencarrow’s ownership, MMC has grown significantly from its core service offering of fund accounting and unit pricing to become New Zealand’s leading provider of full outsourced fund and wealth administration services. Today, MMC provides investment administration services for 30 investment managers and product providers, and more than 70 groups of investment professionals with funds under administration in excess of NZ$100 billion.
MMC chief executive Vedran Babic stated: “Being part of the Apex Group will create new opportunities for our clients and people. Our primary focus on setting clients free to accelerate their success will continue and be further enhanced by the Group’s global footprint, resources, access to new technology and services, which the entire investment sector in New Zealand will benefit from.”
The exit will deliver Pencarrow Bridge Fund investors, including VPEG2 with another exceptionally strong return across a 5.4 year hold period, with the realised proceeds expected to be received by VPEG2 and subsequently distributed all VPEG2 investors during the September 2022 quarter.
MIX. During March 2017, Pencarrow Bridge Fund invested in MIX, an Auckland, New Zealand headquartered, manufacturer and distributor of haircare and natural skincare brands through grocery and pharmacy channels in New Zealand, Australia and South East Asia.
The MIX family of brands are unique in both proposition and formulation each representing a synergy of nature and science. Many brands in the MIX portfolio demonstrate consistent, leading brand performance:
- Primal Earth is the Number One New Zealand made selling men’s skincare brand (FMCG)
- Dominate is the Number One selling men’s styling in New Zealand (Aztec on Web, 13 weeks 10/07/2016) and Number Two men’s styling in Australia (Aztec and Nielsen on Web, 12/07/2016).
- Shock Waves is regularly the top selling Hair Gel in New Zealand (supermarket) and Australia.
- Essano is already the fastest growing skincare brand in Countdown supermarkets (first quarter, FMCG)
Netlogix Group Holdings Ltd. In October 2017, The Pencarrow Bridge fund invested in Netlogix Group Holdings Ltd. Netlogix is a technology enabled freight logistics company that was introduced in New Zealand in 2013. The company connects independently contracted freight carriers with customer freight demand.
Netlogix has developed a highly specialised offering that optimises a freight customers transport and logistics cost by finding the most efficient route and rate card across a network of carriers.
This technology is built around best in class third party software programmes and integrates with both the freight customer and the freight carriers’ systems. Netlogix is highly skilled at analysing, determining and codifying the specific rules that govern the freight and logistics elements of a freight customers’ supply chain.
The Collective. During March 2018, the Pencarrow Bridge Fund announced an investment into premium gourmet yoghurt company, The Collective. The investment was completed during April 2018. Epicurean Dairy Holdings, branded as The Collective, is a leading manufacturer and distributor of gourmet yoghurt through the grocery channel.
Since its launch in 2010, The Collective’s New Zealand business has grown rapidly, achieving strong sales and earnings growth. Following the company’s initial domestic success, it launched into the UK through a joint-venture with UK dairy company Yeo Valley. The company’s UK operations have been similarly successful, with strong sales growth across 2014 to 2018.
The Collective is positioned as a premium brand centred on high-quality fresh and natural ingredients. This proposition has resonated strongly with consumers in both the NZ and UK markets and has driven substantial growth in market share at the expense of larger dairy companies that have a lesser focus, real or perceived, on high quality ingredients.
In addition, the company has benefited from growth in the category in both New Zealand and the UK, given the products’ on-trend attributes. Further, the company’s commitment to new product development has allowed it to capitalise on trends in consumer demand while keeping the brand relevant and generating high levels of brand affinity and customer loyalty.
The proceeds of Pencarrow’s investment into The Collective will be used to facilitate the purchase of shares of the UK Joint Venture company not already owned and to fund the company’s expansion into Australia and Europe.