Rangatira invests $3.5m in tech-based insurance service provider Konnect Net
BUSINESSDESK: Rangatira, the Wellington-based investment company, has put $3.5 million into medical and insurance service provider Konnect Net as those sectors shift away from more costly paper-based administration functions.
Konnect Net offers traditional back-office services using new communication technology and is one of the latest in tech-based investments by Rangatira, including online accounting software provider Xero, Facebook backer Peter Thiel's Valar Ventures and the Movac 3 investment fund.
Rangatira has a conditional undertaking to provide a further $2 million by August next year in follow-on capital.
Chief executive Ian Frame told BusinessDesk there are many investment opportunities in companies looking to leverage new technology to offer traditional business services, though Rangatira will only put up smaller amounts because of the potential risks involved with short-lived companies.
"Because they're at an earlier stage and have a potentially higher risk, we'd invest in the range of $1 million to $5 million," he says. "In more traditional areas it would be between $5 million and $15 million."
Auckland-based Konnect, set up in 2008, was named New Zealand's fastest-growing tech company last year in the Technology Investment Network's TIN100 report, reflecting a 1200% surge in sales, a year after winning over the nation's biggest insurers to use its medical information requests.
In June, Rangatira, which trades its shares on the Unlisted platform, reported a 32% fall in annual earnings to $8.8 million as it shopped around for new investments after exiting Dunlop Living, Tecpak Industries and Te Kairanga Wines last year.
The firm has about $20 million for future investments, and though it has a preference for New Zealand-based companies, Mr Frame says he might have a look at the right private equity opportunity in Australia if it arose.
Rangatira chairman Murray Gough says the new investments reflect their expectation "the strong New Zealand dollar will see a continued shift in the economy from manufacturing to services".
The company has two classes of shares that trade on the Unlisted platform, with 67% held as class A shares and 33% held in class B shares to differentiate between charitable and non-charitable shareholders.
Both classes last traded at $6, and have been the subject of a $4-a-share low-ball offer by Australia's Stock & Share Trading last month.