KiwiSaver provider Generate is investing US$25 million (NZ$40.8m) into an international fund targeting profitable, high-growth US, Canada, Australia, New Zealand and Singapore businesses.
The HEAL Partners Fund II has A$200m (NZ$219.9m) committed and is ultimately targeting more than A$400m by the time it closes in mid-2025.
The 12-year-old Generate already has some $120m in private market investment commitments, including two $20m exposures to two NZ venture capital funds, Movac and The Icehouse Ventures, respectively, and another US$25m with a US private equity fund whose primary asset is a datacentre business.
Co-founder Sam Goldwater said the distinguishing feature of the HEAL Partners fund involvement was that it involved relatively mature businesses in their home markets that showed high potential to be successfully introduced elsewhere.
Removing ink
The two businesses that Generate initially gains exposure to are Removery, a tattoo removal business operating hundreds of outlets in the US and Canada, with combined revenues of more than US$350m.
HEAL managing partner Martin Robinson told BusinessDesk Removery had a “clear leadership position” with 135 tattoo removal studios operating in the US, Canada and Australia versus its closest competitor, with only five.
Within two years, he expected that figure to grow to between 300 and 400 studios to service a market in which 30% of people who get a tattoo either regret and remove one or more, or want to clear space for new ones.
Both businesses were ebitda-positive, the US business was debt-free, and the Fund II investment into Removery would be US$32m.
Similarly, HEAL has injected a further C$25.5m (NZ$30.6m) into Canada’s largest in-vitro fertilisation operator, The Fertility Partners, which, like Removery, was included in HEAL’s A$200m Fund I.
Doubling down
“Fund II allows us to double down on the best-performing businesses from Fund I and back management teams we have built strong, trusted relationships with,” Robinson said.
Generate’s Goldwater also joins the Fund II limited partner advisory committee.
Both HEAL and Generate indicated that further investments in NZ assets were possible in future, either in concert or separately, with Generate currently exposing just 2% of its $6.5 billion of funds under management to private market investments.
Goldwater said that as the KiwiSaver fund grew, between 5 and 10% of FUM might be held in private assets.
HEAL’s strategy was to grow existing businesses either in their home markets or in the US, Canadian, Australian, Singaporean and NZ markets, reflecting the locations “where our team has built and operated businesses successfully”, said Robinson.
The investment is HEAL’s first in NZ, with introductions assisted by New Zealander and former Rank Group and Hobson Wealth executive (and BusinessDesk columnist) Simon Robertson, who encouraged long-time friend Robinson to look at NZ opportunities.
More investments TBA
Robinson said HEAL was open to other NZ partners and investment opportunities.
Once complete, Fund II is expected to invest in eight different businesses, with Generate expecting that about three-quarters of its US$25m contribution will be called “within a couple of weeks”.
Robinson said the fund anticipates announcing its third and fourth investments within three to four weeks.
Headquartered in Sydney, HEAL Partners describes itself as a “growth private equity fund” that targets “revenue-generating businesses in the healthcare, education and related lifestyle sectors with the potential for global scale and industry disruption”.
