Punakaiki Fund targets mid-2019 listing with at least $100m of assets

Punakaiki Fund, the long-term investor in high-growth local firms set up by Lance Wiggs, wants to go public in the middle of 2019 with at least $100 million of assets and will put a plan in front of shareholders at next year's annual meeting.

The Auckland-based fund has built up an investment portfolio worth $28.4 million across 19 companies including point-of-sale software developer Vend, telco Vibe Communications and online retailer Onceit, its 2017 annual report lodged with the Companies Office shows. In the year ended March 31, it invested $3.4 million and recognised a $5.6 million gain in the fair value of its portfolio. That helped the fund generate a net profit of $4.1 million, compared to $2.8 million a year earlier when the fair value gain was $3.7 million.

Chairman Mike Bennetts said the investor plans to lift its transparency to investors, introducing share trading windows after each quarterly report when it will also hold investor briefings. The board has set a target for listing the fund in the middle of 2019, and as start getting external valuers for its larger holdings, with the intention of getting at least one firm independently valued for its September 2017 interim accounts, he said.

"We believe that as a listed investment company we should have assets of at least $100 million to ensure that the ongoing costs are reasonable," Bennetts said. "We will provide a considered opinion on the options for listing (or not) for shareholders to vote on at Punakaiki Fund's annual meeting in 2018."

Wiggs tried to raise as much as $50 million for Punakaiki in a public offer in 2013, but scaled back his ambitions are falling well short of the minimum target and has used crowdfunding platform Snowball Effect alongside wholesale and retail offers to raise capital for the investment entity. Since then, Punakaiki has raised $5.5 million from 618 shareholders.

The fund is managed by Lance Wiggs Capital Management, run by Wiggs and Chris Humphreys, which has a 10-year agreement with the fund, generating fees of 2 percent of net asset value up to $50 million and 1.5 percent thereafter. It also attracts a performance fee of 20 percent of a return above the subscription price of each share tranche provided it beats an annualised 10 percent pace at the time of a liquidity event.

Revenue from the firms in Punakaiki's portfolio rose 34 percent to an estimated $69.5 million in the year ended March, and net asset value per share rose 18 percent to $20.10, or $26.4 million.

Wiggs said that increase in net asset value was "lower than where we would like to be" but that he was satisfied that there was "underlying long-term growth in value".

Punakaiki is being frustrated by growing demand for from high quality existing investments beyond its ability to raise capital, and missed out on an investment round in Vend in December "where we felt we could not meaningfully contribute," he said.

"We will continue to focus on helping those companies where we see the best returns, and accept that at times we may not have a meaningful enough investment to join a new investment round," Wiggs said.

Earlier, Mr Wiggs expressed his disappointment in the performance of ThisData , which was sold to US company OneLogin after laying off all staff bar founder Rich Chetwynd.

Punakaiki paid management fees to LWCM of $420,000 in the 2017 financial year, up from $251,000 a year earlier, and recognised accrued performance fees of $978,000, up from $644,000, which would be paid in cash and shares.

Wiggs said the manager takes a "very frugal approach to investing", but are set to increase over the next two years ahead of the planned initial public offering.

"For now we see that the size of Punakaiki Fund is too small to list and want to maintain our frugal approach to help maintain your investment value," Wiggs said, signalling the fund will likely seek more capital later this year.

(BusinessDesk)