Fisher Funds chief investment officer Ashley Gardyne. Photo: Supplied / Fisher Funds
KiwiSaver provider Fisher Funds says it will invest up to a billion dollars over the next three to five years in private equity, such as unlisted businesses.
It will add private equity to four of its KiwiSaver schemes.
Chief investment officer Ashley Gardyne said it should improve the returns for those schemes, and would give investors access to growing businesses at a time when fewer were listing on stock markets.
"There's also a broader benefit, as more people push into private markets, more money flows into the real economy and that has a positive impact on New Zealand business formation."
He said about $300 million of the $1 billion could be invested in New Zealand businesses.
There were about 1000 businesses in the likely target range of being worth $20m and $100m in this country, he said.
Fisher Funds would be looking for stable businesses that had been around a long time, in areas of growth.
"We'd like the management team to be involved and ultimately be investors alongside us."
He said there were liquidity risks with private equity investments but KiwiSaver was a long-term savings vehicle, which aligned with the longer-term nature of private equity.
"When you commit to buying a private business, you're often invested for five or seven years. You need to make sure it's only a portion of KiwiSaver funds. In Australia, up to 20 percent of super is in unlisted investments. We'll be starting at a much lower level."
It would scale up to 10 percent over the next five years.
The benefit for investors would be in higher returns, he said. "If you look at the balance of a 20-year-old, even an extra half-percent over the long term could potentially result in another $100,000 at retirement. Making small changes can have a significant benefit, long-term."
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