Episode 8 of the Curious Kiwi Capitalist Podcast 28 January 2020 My guest for this show is Simeon Burnett of Snowball Effect, a crowd funding platform and private equity marketplace. We discuss the crowd funding and equity raising landscape. Snowball Effect tends to work in the post-earnings post start-up stage of companies rather than the start-up and rewards part of crowd funding. Simeon walks through how Snowball Effect helps connect entrepreneurs to investors. We get into the weeds with their process including screening, wholesale investors, documentation and the like. We finish off with his career in corporate finance at Fonterra before he started Snowball Effect. Show Notes About Simeon held a number of different corporate finance roles at Fonterra, before cofounding Snowball Effect. Links Snowball Effect Episode Show Notes Transcript: Crowd Funding with Simeon Burnett of Snowball Effect Transcript to come.

Curious Kiwi Capitalist

Crowd Funding with Simeon Burnett of Snowball Effect

Episode 7 of the Curious Kiwi Capitalist Podcast 12th December 2019 My guest for this episode is Lance Wiggs, Manager of the Punakaiki Fund, a Venture Capital fund. We discuss the New Zealand venture capital landscape and how a venture capital firm operates. Lance takes a different approach to most VCs in how he has structured the LP side of the Punakaiki Fund  with capital raising from wholesale and retail investors over time rather than a smaller number of instituional investors up front. This is partly due to the shortage of NZ venture capital investors something we also discuss. We finish off with his career path including assisting TradeMe with valuation and his time at Yale. Show Notes About Lance Wiggs is a Principal of Lance Wiggs Capital Management, the Manager of the Punakaiki Fund. In 2013 he co-founded this $50M VC fund for investing in high growth technology companies in NZ. It is an innovative approach to the venture capital gap in New Zealand. He is a director of many companies, most/all of which are fund investments. He has launched Pacific Fibre, advised TradeMe on valuation on the Fairfax sale, and has worked at McKinsey in Washington DC  amongst a wide range of roles he has undertaken overseas. Links Lance Wiggs Punakaiki Fund Episode Show Notes Transcript: Venture Capital with Lance Wiggs Coming in January 2020.

Venture Capital with Lance Wiggs

Episode 6 of the Curious Kiwi Capitalist Podcast 25 September 2019 My guest for this show is John Shewan—former chair of PWC, and serving Adjunct Professor of Victoria University and independent director. In this episode we discuss: Why the Capital Gains Tax (CGT) 2019 recommendation failed Lessons from tax reform through the decades including: --the rebellion against Muldoon's tax rates, --wide support and importance of the broad-base / low-rate approach, --always talk about tax in terms of tradeoffs and how taxpayers will be no worse off e.g. Sir John Key selling the GST and income tax rate changes together, --unless there is a crisis then incremental tax change with compromises is the best approach, --the government needs to actively sell their tax changes or others will take over messaging. The strengths of a land tax especially if accompanied by decreased income tax and increased entitlements (super & WfFTC) Government and demographic spending requirements putting extreme pressure on personal tax rates—bracket creep is now resulting in low income levels paying a 30% rate. Either income tax or GST rates will need to increase within 10 years unless the tax base is broadened e.g. through a land tax or investment property CGT. Show Notes About John Shewan has had a long career in accounting, business and now academia. He is an independant company director, former chair of PWC and serves as an Adjunct Professor at Victoria University. He sat on the Buckle Tax Working Group in 2010 ("A Tax System for New Zealand’s Future", Victoria University of Wellington) and has been a tax practitioner throughout his career. He is a past Chair of the Tax Education Office and the National Tax Committee of the New Zealand Institute of Chartered Accountants. He was awarded the CNZM in 2010. He is truly not just NZ's top tax expert but also brings intellectual firepower together with practical shrewdness to our business community. Links LinkedIn Appointment as Adjunct Professor at Victoria University Episode Show Notes Transcript: Tax Reform including Capital Gains Tax with John Shewan Bruce: What are we trying to do with taxs here in New Zealand? John: There's really three major objectives with taxes aren't there. The first one and the primary one is to raise the revenue that government needs to run the country, and to put it in context in the year to 30 June 2019 government's expecting to collect around $84 billion in both Direct Tax and GST and other indirect taxes and another $5.8 billion and ACC, fire service levies and fines and other revenue. So that's the primary focus, but two other really important aspects of text redistribution of wealth tax does have a role in that the primary means of redistributing wealth is through the wealth transfer system, but obviously progressive tax rates achieve that as well and then thirdly an increasingly there's a focus on corrective and behavioral taxes. Things like taxes on tobacco and alcohol and now we're looking at taxes around environmental waste etc. So those are the three primary objectives and one of the most important messages I try and convey on tax policy is let's work out what aspect of that we're talking about before we start talking about the text tool that might be best to achieve it. Bruce: And it seems that the increase in taxs is expected to rapidly increase over the coming years.. John: Yes so the New Zealand tax system has performed extremely well over the last 30 to 40 years, its served successive governments well. We've basically got a sound system and the power of that can be seen in the 2019 budget where there's a projection of tax going up by about 25% over the next four years. Which is quite a significant amount obviously and that's driven off the strong bases of GST and also personal and company income tax. That kind of increase though is useful from a government perspective. However, We have to be cautious that we don't bake in spending that equals that...

Tax Reform including Capital Gains Tax with John Shewan

Episode 5 of the Curious Kiwi Capitalist Podcast 13th September 2019 My guest for this show is Ian Frame, retired CEO of Rangatira Investments, a long-term private equity firm. In this episode we discuss what is a private equity firm, what's their fees, investors and strategy the difference between classic private equity (PE) firms and long-term PE firms what sort of investments they're after and their investment horizon stock market crashes, investor cynicism and regulation venture capital and angel investing and much more.. Show Notes About Ian Frame was the CEO of Rangatira, a long-term private equity company, for 11 years up to his retirement in 2014. Rangitira was one of the earliest private equity firms and Ian was one of a line of extraordinarily talented CEOs who have made it one of the most successful PE investors in NZ. Originally an engineer, he was one of the first New Zealanders to get an MBA and worked at DFC duing the '70s before joinging Downer in an international role. He worked for investment companies often in a CEO change management role. He has retired in Taranaki but still is involved in angel investing. Links Ian Frame (LinkedIn) Rangatira Investments "Long-Term Private Equity with Ian Frame" show notes Transcript: Long-Term Private Equity with Ian Frame Bruce: Firstly, what is private equity? Ian: Well in New Zealand private equity really falls into probably three categories actually. The first there are a number of private equity firms that go and raise capital from from superannuation funds and other large institutional parties and they will invest that money on their behalf. They take a management fee. And usually they have to pay the funds back within five or seven or ten years. The second category of those that invest similarly that they have their own equity and I'm talking about the Rangatiras, Todd capitals those family funds, and most of them will have maybe up to 200 million of funds to invest and they invest longer term. They don't have to repay the money they can afford to hold on to it and ride out the cycles. The third category is really in New Zealand there are a large number of family businesses and that includes virtually all of the farming sector that run based on capital provided by the family and the money they have accumulated from those companies over the years. Bruce: In the case of the first category the what I'd call perhaps erroneously as a classic private equity firm, they would have the limited partners: the superannuation funds, the endowments perhaps, wealthy families and individuals and they would invest that money into a fund and then the private equity firm would get a management fee and a performance fee. What's the management fee and performance fees that they tend to get? Ian: Well they vary but generally speaking they would take a 2% fee per annum on the funds invested and then they will take a percentage like 20% of the gain over and above a fixed return. So the fixed return maybe eight percent per annum so they have to achieve that over the life of the investment and then if there's a surplus above that then they'll take that. So that's what's known as a 2 plus 20 arrangement. There have been times when that's been common have been times when that's been under pressure. Where it's right today, I'm not a hundred percent sure, but it it's probably around that. Bruce: And that firm will have different funds how long do those funds tend to last? Ian: Well, they raise them on the basis that they have to be repaid within a certain period of time and that period of time will invariably be longer than five years, but less or at a maximum 10 years. Bruce: So if they invest in a company in year zero/one they need to sell their company by year 10. Ian: Yeah and sure and they don't, they raise their money first and then they look to invest those funds. It may take them two or three years to find something to invest in.

Long-Term Private Equity with Ian Frame

Episode 4 of the Curious Kiwi Capitalist Podcast 27th August 2019 My guest for this show is Richard Higham. Richard is one of the top business academic practitioners in New Zealand history. He has not only experienced but researched and studied entrepreneurship. He has run his own firm, consulted to corporates about entrepreneurship, and saw the start of venture capital in NZ before "venture capital" was even really a word. Now in his eighties, he is still going strong, as you'll see he is the master of the rhetorical question and pretty much ran this interview himself! In this show, we'll discuss entrepreneurship and the early days of venture capital in New Zealand including: The king, the castle and le entrepreneur Austrians and supply-side entrepreneurs Drucker arrives on the scene leading to a bloosoming in books and research on entrepreneurship from 1983 to 1986. Early venture capital in NZ 2-6-2: 2 winners only The Saudi king and Saudi Corp in NZ Graeme Hart, his MBA and financial wizardry Process vs poduct innovation Large corporates find entrepenurship from within, they're in the woodwork, somewhere though the "corporate immune system" then tries to destroy it Death Valley and the going up the S-Curve The assumption that 80% of small business were going broke is wrong, its probably only 30%. Prospective entrepreneurs making up less than 10% of the NZ population of which only a few succeed Otago University rugby Blooz Nooz. Show Notes About Richard Higham still lectures at Otago University. The lectures are run at the same speed you hear in the episode, always a sprint, but always time for a student. I believe he was a pathfinder for many New Zealand entrepreneurs, not the least being Graeme Hart. He studied at Oxford, as a young man worked at Imperial Chemical Industries, went to London Business School as a Sloan scholar, and worked at various times in the Auckland and Otago MBA programs, and consulted far and wide. Richard Higham was my master's thesis supervisor at Otago University as well as my favourite lecturer. Indeed, of the 8 courses I took, he ran three of them, all of them practical and useful today in representing or investing in high growth companies. Richard has played rugby, and also has been heavily involved in coaching and leading the Otago University Rugby Club. If you played rugby at Otago then you will want to subscribe to his newsletter about Otago Univeristy rugby, the popular Blooz Nooz. Links Richard Higham at Otago University Blooz Nooz Otago University Rugby Club newsletter, subscribe by emailing Richard: richard.higham@otago.ac.nz "Entrepreneurship & Early Venture Capital in NZ with Richard Higham" show notes Transcript: Entrepreneurship and early Venture Capital in NZ with Richard Higham Bruce: Thanks Richard for coming along to this episode about entrepreneurship. Perhaps a little bit about the history of venture capital. I remember my time fondly here at Otago University in the courses that that you taught. Let's kick it off by asking you about entrepreneurship. What is entrepreneurship? Richard: What is entrepreneurship? Well, it started off years and years and years and years ago in France. Where the entrepreneur built castles for the king and the King said I want a castle and someone came along and said I know how to get a castle for you and it'll cost you so much. So this was really a demand-side initiative the king wanted something and an entrepreneur in France le entrepreneur provided it. And this went on bring the fashion in France for generation after generation after generation until things changed because what happened was that people started not responding to demand but by taking initiatives they started something themselves. And some people who started things were accused of being against the law. You can't do this. You can't simply change things like this and one chappie wrote an article about it way back in the 1720s in which he maintained that the entrepr...

Entrepreneurship & Early Venture Capital in NZ with Richard Higham

Episode 3 of the Curious Kiwi Capitalist Podcast 15th August 2019 My guest for this show is Alexander Simmons. Alex is the founder of Voyager Equity a search fund. Search funds are completely new to New Zealand with no fund yet launched but with some interest from Kiwi searchers overseas. In Australia they have gained traction in the last couple of years with at least two funds succesfully acquiring businesses. Alex is the first Australian search fund to get investment for "search capital", the traditional first tranche of investment in a fund. The other two funds self-funded their search and then got "acquisition capital" the second tranche of investment. I have to admit I am very intrigued with this type of investment fund and have been involved with encouraging prospective Kiwi searchers in 2019. My hope for young searchers and retiring mid-market business owners is that this investment type takes off over the coming decade. In this show we'll discuss search funds in New Zealand and Australia including: what is a search fund? search and acquisition capital the search capital step-up and "Stanford terms" search fund investors research on search fund returns searcher vesting search funds vs private equity investment parameters what prospective searchers ask Alex the most search fund accelerators and business schools Show Notes About Alexander Alexander Simmons founded Voyager Equity earlier in the year, and it is the first search fund that has raised "search capital" in Australasia. Others have raised acquisition capital, an achievement in its own right, but no one till Alex had raised the first part of a traditional search fund. This makes Alex a real trail blazer in Australasian search funds. Alex is English, who started his career at Bestport Ventures LLP a UK private equity firm that invests in growth capital and small buyout opportunities in the UK. He moved to Australia where he worked for Partners in Performance to get hands-on operational experience including in New Zealand. He started up his search fund Voyager Equity in 2019. He has an MBA from INSEAD and a BA from Oxford. INSEAD has one of only a few search fund courses in the world. Links Voyager Equity Alex's search fund website. “Search Fund Primer 2016”, Stanford Graduate School of Business. "International Search Funds – 2016 Selected Observations", IESE, June 2016 in IESE Search Funds Search Funds in New Zealand: what are they and a way forward (my views in a previous article) Relay Investments Harvard Business School Jim Sharpe in this case who I know is a supporter of Kiwi Harvard grads doing search funds. Search Fund Accelerator (Timothy Bovard, Boston) Second Squared Australian Search Fund Accelerator "Perspectives on Search Funds". A podcast series featuring all things related to search funds and entrepreneurship through acquisition. Hosted by Brian O’Connor, Adjunct Professor of Entrepreneurship at the University of Chicago’s Booth School of Business and Managing Partner of NextGen Growth Partners. "Search Funds in Australasia with Alexander Simmons" show notes. Transcript: Search Funds with Alex Simmons Bruce: What's a search fund? Alex: Morning Bruce, quite simply it's a vehicle a company, whereby an individual such as myself raises some money from investors, that money essentially pays a modest salary to me and provide some some headroom for expenses while I go for a period of time typically two two and a half years to look for a company to buy. So it's really something to facilitate the acquisition of a company which would be an existing company that's had a long operational history. And the seller is looking to retire or transition out of the business and then I would I would come along and buy Bruce: We're sitting here in your offices in George Street in Sydney. You are the first person who's raised search capital, as we call it, in Australasia. Congratulations on that and that search capital as you say pays for your the sal...

Search Funds in Australasia with Alexander Simmons

Episode 2 of the Curious Kiwi Capitalist Podcast Show 9th August 2019 My guest for this show is David Quigg. David is the head of Mergers & Acquisitions at Quigg Partners a boutique Wellington law firm specialising in M&A and a few other specialist areas. In this show we'll discuss M&A from a lawyer's perspective including: publically listed company M&A process and the differences with private company M&A a practical approach to buying and selling a company including agreeing on key terms in an MOU (while being careful about what is binding) how a fixed auction process is unusual in a private M&A transaction unless it is a large transaction NDAs, key clauses and enforecement Earn-out briding a price gap but causing problem down the track the need for early OIA approval in the case of a foreign investor due diligence and retentions representations and warranties shareholders agreement, including drag-along carry-along and Russian Roulette clauses why asset sales (rather than share sales) are preferred by buyers even in larger transactions if possible net asset adjustments in a share sale Show Notes About David David Quigg has a LLM, was a member of the NZ Takeovers Panel for a decade and has an international reputation as one of New Zealand's top M&A lawyers. Quigg Partners were established in 2000 and now have 17 lawyers. You'd recognise a number of famous international and local company names they have represented over the years. Links David Quigg and Quigg Partners "M&A and Business Sale Legal Process with David Quigg" show notes. Transcript: M&A and Business Sale Legal Process with David Quigg Bruce: Welcome David to the podcast. David: Thank you very much indeed Bruce. Bruce: Thank you for doing this, it's a complex area this particular part of the M&A process and I'm sure the law as well. What's the process that you see and where do lawyers get involved in that M&A process? David: The first one is probably to differentiate between public M&A and private M&A. Public M&A is a lot more in the public domain. It's much more regulated by the Takeovers Act or if you're doing a scheme of arrangement the rules that govern schemes and also you've got the factor in the stock exchange listing requirements, insider trading restrictions etc. Yet private M&A is perhaps less of that regulatory regime and much more contractual and negotiation in private as well. So from a lawyer's perspective differentiating between those two kinds of Alternatives is quite critical and you'd have to say in New Zealand we don't have a huge amount of public M&A. So the the public M&A amount perhaps our last involvement was for McDonald's in respect of the investment and Plexure that is kind of one-and-twenty as in the public M&A space. Most of the New Zealand transactions is in the private M&A and its contractual based. Bruce: Yes. Perhaps let's talk about the simpler process first the private M&A and then at the end if we have time talk about the differences with public. When a client approaches you and they might be selling or acquiring, what's the process that you see perhaps for a mid market size business, perhaps choose your figure choose your transaction time. And as you go through that process where do they ask for advice? David: I think the earliest they get the lawyers involved the better. Now, that's obviously a bit of a self-serving statement. The beauty of getting the lawyers involved in particularly ones that do a lot of these transactions it is they get those milestones quickly and you make good progress and you can set a realistic timetable. The first one that normally comes up is the discussion about should we have a term sheet, heads of agreement etc? In New Zealand would strongly recommend that you do because what that does do is get agreement on price. So that's not legal agreement, that's a commercial agreement. So all things being equal. I'm prepared to pay $20M say for the tech business tha...

M&A and Business Sale Legal Process with David Quigg

Episode 1 of the Curious Kiwi Capitalist Podcast Show 4th August 2019 My guest for this show is Sir Eion Edgar KNZM. Sir Eion recently retired as Chairman of Forsyth Barr, a firm he was with for almost 50 years with the last 20 as Chairman. There are few people who know more about the New Zealand public capital markets. In this show we cover the evolution of the public capital markets including: the history of the various stock exchanges and their change in structure the changes in investor mix over time i.e. retail, managed funds and institutional the changes in diversification strategy comparative changes in IPOs over the decades "Muldoon's mistake", hint: a super mistake dramatic technological change the lingering damage of 1987 crash on our markets whether there is a the funding gap for early stage and mid-market businesses the rise of private equity the problems of being listing on the stock market three things to improve the capital markets Show Notes About Sir Eion Sir Eion is well known for his time at Forsyth Barr but he is also a skilled private markets investor and philanthropist. He famously invested in a potato business called Mr Chips which he sold for a handsome profit (Sir Eion and family are on the NBR Rich List) in 2008. Currently he is chairing Hawaiki Submarine Cable as well as investing through his family business the Sinclair Investment Group. But most in Otago (an area I lived in for many years) know him for his philanthropy. He is the chair of the NZ Dementia Prevention Trust, patron of Diabetes NZ, NZ Football Foundation, NZ Sports Hall of Fame, Queenstown Trails Trust and ShelterBox NZ. He was the driving force behind the building of the Dunedin Indoor stadium and so many other local charitable causes. But I know him best for his service to NZ Snow Sports. Not only does he support snow sports athletes through his foundation but he essentially bought a version of the winter olympics (he is a past NZOC President) to New Zealand through the Winter Games NZ. It's here where I saw him in action, the diplomat, the businessman, athlete's biggest fan and sports fanatic—if there is ever a role model for aspiring business people it is Sir Eion. Sir Eion recently retired as Chairman of Forsyth Barr. He is formerly Chancellor of the University of Otago and Chairman of the New Zealand Stock Exchange. He was also formerly a Director of the Reserve Bank of New Zealand, the Accident Compensation Commission, Mt Cook Alpine Salmon, and Vero Insurance New Zealand Limited. Links Sir Eion Edgar and Forysth Barr Business Profile on NBR Otago University Profile Sir Eion and Philanthropy NZ Public Capital Markets with Sir Eion Edgar show notes Transcript: Public Capital Market Interview with Sir Eion Edgar Bruce: Thank you, Sir Eion for for doing this interview this episode about the public capital markets much appreciated. I'm sitting in your house here in sunny Queenstown looking across Lake Wakatipu. And I must say this is a fantastic view in a fantastic location. Sir Eion: Not hard to enjoy life when you've got this outlook. Bruce: The agenda for today is just to go through the evolution of the public capital markets. Of course, mainly that is the NZX, but there seems to be other things that are happening as as welll, we have the other other exchanges and we seem to have a attempts to create secondary markets as well. I'm leaving ahead of myself. What I what I might do is just start off generally and. Move into the decades because Sir Eion you've been around since the 70s, you have seen it all, and talk how those public capital markets have evolved over that period of time, but firstly what's the role of the public capital markets Sir Eion: The public capital markets play a key role in capital formation in New Zealand without them it would be very difficult to float and raise and attract new industries, but particularly it allows for greater participation in so many of these ...

NZ Public Capital Markets with Sir Eion Edgar

Episode 0. Introduction to the Curious Kiwi Capitalist Podcast 1st August 2019 The Curious Kiwi Capitalist podcast is about the New Zealand capital markets and the people in them including: asset allocation and portfolios private business capital structure business valuation M&A process behavioural finance capital allocators private equity venture capital alternative investments investment strategies and how we apply them from NZ (e.g. passive, active, factor based, savings vehicles including ETFs, PIE funds and KiwiSaver managed investment fund CIOs hedge funds IPO and NZ NZX ASX banks, non-banks, reserve bank, investment banks financial advisers due diligence negotiating a sale and purchase agreement ...whatever takes my fancy really, it's my curiosity after all :) It is for investors and capital allocators, business owners and investment bankers, financial advisers and wealth managers, venture capitalists and angel investors, finance students and their professors... it's about the NZ finance industry. I speak with New Zealanders who have real insight into NZ capital markets. We talk about history, about how they got here, how they think our capital markets can be better and their views about family, politics, rugby, wine... It's not a lecture or a journalist's interview, just a friendly discussion about them and their views. It is about their own finance industry journey, their own thoughts—not a staid business interview. As an M&A Adviser and Authorised Financial Adviser, I'm in the unique position of operating on the sell-side (M&A) and the buy-side (financial advice and investment planning). The industry is fascinating and I hope I can bring out all that is interesting in this podcast.  

Curious Kiwi Capitalist Podcast Introduction

The Curious Kiwi Capitalist podcast is about the New Zealand capital markets and the people in it

hubhopper

Curious Kiwi Capitalist

hubhopper