High profile tech investor Lance Wiggs' Punakaiki Fund launched the first equity crowdfunding campaign for a private equity fund in New Zealand on the Snowball Effect platform.
The offer has already surpassed its $200,000 minimum target to reach $660,000 and is limited to the $2 million maximum that can legally be raised through equity crowdfunding offers. If the entire $2 million is raised, it will equate to 25.7 percent of the fund, which invests in early-stage, fast-growing New Zealand firms.
The offer is being made at the same time as the fund runs separate offers to existing shareholders and to other sophisticated investors. The offers all close on June 30. The Punakaiki offer on Snowball is for a minimum 100 shares at $14.50 per share which is the same as its offer to existing shareholders, while the offer to sophisticated investors has a minimum threshold of $21,750 for 1,500 shares.
Wiggs said whatever is raised can be invested into its 10 existing high-growth companies and acquiring others. Still, he’s contained his expectations of what may be achieved in the fundraising bids following a failed initial public offering in 2013 where it raised only $3.3 million of a hoped-for $50 million and returned the money.
“That was disappointing so I don’t have a number in my head for this one,” he said.
Punakaiki eventually launched as a private fund in April last year after raising $4.2 million in three separate placements.
Snowball Effect said it had no concerns about promoting a private fund and pointed out crowdfunding for the film The Patriarch, which raised $488,000, was a worldwide first for a movie. The rationale for doing that sort of thing is to give investors more diversity in their options, it said.
The Punakaiki offer is based on a director’s valuation of the fund being worth $5.78 million. The pricing of the share offer takes into account the dilutionary affect of $1.78 million worth of share options that existing investors can choose to take up by June 30 and a further $1.29 million worth in September.
It’s managed by Lance Wiggs Capital Management, which is owned by Wiggs and Chris Humphreys.
The plan is to eventually conduct another IPO and sharemarket listing within the next three to five years.
Management fees for the fund are equivalent to 2 percent of its net asset value per annum, lowering to 1.5 percent once the fund’s value rises to over $50 million, which is in line with other private equity funds but well above the likes of unit trusts. There’s also a performance fee of 20 percent for a rise in the fund’s market value, providing that increase is above 10 percent per annum.
The fund plans to appoint an independent director before the end of September.