The Karaka Private Equity No.1 LP Offer was made to Wholesale Investors/Eligible Investors and successfully closed on 29 March 2018 with $35 million raised. Karaka invests as a limited partner in Pencarrow V Investment Fund LP (Fund V). Fund V successfully closed 29 March 2018 with capital commitments of $250m. Fund V focus investment on private New Zealand domiciled, lower and mid-market companies with enterprise values of $20m – $100m.
Karaka Private Equity No.1 LP (“Karaka”); Karaka Management Limited (the “General Partner” and “Manager”) and
Karaka Nominees No.1 Limited (the “Nominee”)
Pencarrow Private Equity Management Limited, a company owned by Pencarrow executives, is the investment manager of Pencarrow V (“Investment Manager”).
The General Partner of Karaka will be Karaka Management Limited. Once incorporated, the General Partner will enter the Pencarrow V limited partnership agreement on behalf of Karaka.
Up to 50 million Limited Partnership Shares (“Shares”), with the possible provision to issue further shares for oversubscriptions*, are being offered at an issue price of $1.00 per Share (“Issue Price”). The Shares are to be held by the Nominee on bare trust for the investors. The total amount of committed capital for Karaka will be equivalent to the total number of Shares allotted multiplied by $1.00. (*The Manager may elect to accept oversubscriptions in Karaka subject to Pencarrow’s agreement)
An application fee of 1.25% of an investor’s Committed Capital is payable by the investors to CIP upon application (“Application Fee”). The Application Fee will be used to pay brokerage to CIP and contribute to the costs of bringing this Offer to the market.
The remaining $0.99 per Share, being the balance up to the Issue Price, is payable in tranches. Calls can be for a minimum of $0.01 per Share and will be subject to at least 10 days’ advance notice to the investor. The Manager will generally make calls on Karaka investors when the general partner of Pencarrow V makes calls on the limited partners (including Karaka) of Pencarrow V. The proceeds of the initial tranche, and each subsequent call, will be applied to successively pay in full for the investor’s Shares in Karaka and, in turn, Karaka’s partnership interest in Pencarrow V.
Within Pencarrow V, there is a fee of 2.00% (plus GST) per annum of the Committed Capital of Pencarrow V, payable by Pencarrow V quarterly in advance to the Investment Manager until the end of the Investment Period (being five calendar years from Pencarrow V’s Final Closing Date). Following expiry of this Investment Period the Management Fee will be 2.00% (plus GST) per annum of Invested Capital. The Management Fee will also cover Karaka administration costs which are charged to the Investment Manager at 0.25% per annum. There is no additional management fee charged by Karaka.
Karaka will provide quarterly investor updates. Matters such as portfolio company performance, valuations and financial statements will be provided through annual reports. All information provided to investors must be kept on a confidential basis. Investor information will be available on the website karakape.co.nz
Investing as a limited partner in Pencarrow V Investment Fund LP (“Pencarrow V”). Pencarrow V will invest in private equity transactions such as expansion capital, management buy-out/buy-in, succession and replacement capital opportunities into mid-sized New Zealand and Australian companies, typically having an enterprise value of between $20 million and $100 million each.
Karaka Management Limited, a wholly owned subsidiary of Craigs Investment Partners Limited (“CIP”) will be incorporated to administer Karaka.
The Nominee will be a company named Karaka Nominees No.1 Limited (which will be incorporated as a wholly owned subsidiary of CIP). The Nominee will hold the limited partner interest in Karaka Private Equity No.1 LP on bare trust for (ultimately) the investors in Karaka as sub-custodian of Custodial Services Limited.
The minimum investment commitment for each investor (“Committed Capital”) is $100,000 paid up on initial application to $1,000, and thereafter in $25,000 increments (paid up to $0.01 per Share), plus the Application Fee.
An initial subscription of $0.01 per Share subscribed for is payable upon application (”Initial Subscription Amount”), plus the 1.25% Application Fee on the total Committed Capital.
The investment period will be in line with Pencarrow V’s investment period, which will run from Pencarrow V’s “first closing date” (defined in the Pencarrow V limited partnership agreement as the earlier of the date that the minimum fund size of $100 million is achieved and 30 June 2018) and continue for five years from Pencarrow V’s “final closing date” (defined in the Pencarrow V limited partnership agreement as the earlier of six months from the First Closing Date and the date on which the aggregate committed capital for Pencarrow V is $250 million) (“Investment Period”).
Whilst there will be no formal secondary market for the Shares, CIP will endeavour to match buyers and sellers of Shares on an informal basis. Only clients of CIP can acquire Shares. Any potential buyers must qualify as Wholesale or Eligible Investors.
Please contact the manager for further information on the offer
The General Partner and Manager is responsible for overseeing the administration and treasury functions of Karaka. This role involves all communication with investors in Karaka and managing the flow of funds between the Investment Manager and Karaka investors. The board (Board) of the General Partner and Manager comprises three directors: Neil Craig, Mike Caird and Ken Phillip.
Neil Craig and Mike Caird are currently directors of Craigs Investment Partners, and Ken Phillip is the Chief Financial Officer of Craigs Investment Partners. All three have many years of experience in administrative roles associated with the Pohutukawa Private Equity funds and other funds. Neil is also director of Oriens Capital Limited.
Supporting the directors in administration of Karaka will be Peter Lalor of Craigs Investment Partners who will act as executive officer.
The Investment Manager of Pencarrow V Investment Fund LP (Fund V) is Pencarrow Private Equity Management Limited, a company owned by Pencarrow executives.
The Investment Manager has an Investment Committee which is responsible for all investment decisions for Fund V. The investment team includes managing partners Rod Gethen and Nigel Bingham, Partner Jonathan Goldstone, Investment Director Philippa Weston, investment manager Hazel Martin, investment analyst Bryn McLennan, and Leah Anderson Chief Financial Officer.
For further detail on the Investment Manager, including team biographies, the Pencarrow investment focus and investment track record please refer to the January 2018 presentation by Pencarrow to Craigs Investment Partners.
Karaka is structured as a limited partnership under the Limited Partnerships Act 2008. The General Partner is Karaka Management Limited (a wholly-owned subsidiary company of Craigs Investment Partners). Karaka Management Limited is also the Manager of Karaka.
Karaka invests as a limited partner in Pencarrow V Investment Fund LP.
Investor Shares in Karaka will be held via a nominee, Karaka Nominees No.1 Limited, a sub-custodian of Custodial Services Limited (wholly-owned by Craigs Investment Partners) and will hold the Shares on bare trust for Karaka investors.
The structure diagram is shown below:
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