Analysis: Sandy Maier joins Punakaiki board
UPDATE / June 26: Lance Wiggs has named two new directors of the Punakaiki Fund, a blank cheque fund that is seeking to raise $20 million to $50 million to invest in early stage technology and design companies.
They are Sandy Maier - best-known for his ultimately doomed bids to save South Canterbury Finance and Geon Group - and lawyer and intellectual property specialist Wayne Hudson, a retired partner in Hudson Gavin Martin.
Messers Maier and Hudson join Mr Wiggs and his business partner Chris Humphreys on the Punakaiki board.
Mr Wiggs refused to comment on interest so far, citing regulatory restraints.
On social media on June 10 he offered, "We went past $2 million in pre-registrations for Punakaiki Fund this weekend. Average amount about $15,000 ... We are only just now reaching out to investors with more to invest."
Yale undergrad and Harvard Law School graduate Mr Maier served in international commercial and investment banking with Citicorp/Citibank for 15 years. He came to New Zealand in 1986 to establish Citibank in New Zealand as CEO and in 1990 served as the Statutory Manager of Development Finance Corporation, a role which saw him awarded a Commemoration Medal for services to NZ.
Any mention of Mr Maier on NBR ypically draws comments - many unpublishable - from a small army of those still angry after the South Canterbury Finance collapse. The first draft of this story was no exception.
The feedback prompted the Mr Wiggs to expand on the new appointment.
"I'm delighted to have Sandy on the board. He has amply demonstrated that he is unafraid to take on big challenges and has retained his integrity throughout his career," the Punakaiki co-founder told NBR.
"I'd met Sandy several times over the years through Yale alumni events here in Auckland, even discussing the SCF events as they occurred.
"The negative criticism of Sandy seems to come from investors who were on the wrong side of turnarounds that failed, and I understand how they can feel aggrieved.
"However I see Sandy as someone who is unafraid to take on a tough challenge, and I deeply respect him for that.
"He seems to stick the turnaround attempts out to the end, even when the results may look worse for him in the press. He has maintained his integrity.
"We are looking to his experience in funds management. We'd heard much about and have now experienced his superb knowledge and advice. When places like Ngai Tahu Holdings place him on the board that's pretty hard to ignore, and I imagine they know the SCF story very well."
Mr Maier currently serves as director for several companies including PowerbyProxi, and is chairman of Pathfinder Asset Management and Innova Products.
Mr Hudson's career has seen a focus on IP, plus the acquisition and sale of technology businesses, raising capital and the establishing and structuring of start-up businesses. He also advised on all aspects of licensing, franchising and international distribution agreements. He was a trustee of the government-established HiGrowth Project Trust and president of the New Zealand Software Association.
Wiggs to float $50m tech fund
UPDATE / May 24: As exclusively previewed by NBR ONLIINE on Tuesday, Lance Wiggs and business partner Chris Humphreys are preparing to publicly float a fund in a bid to raise $20 million to $50 million. The money will be invested in early-stage NZ tech and design companies.
The pair are aiming for a June or July IPO for the Punakaiki Fund - but will not say if they will list it on the NZX, an alternative exchange or otherwise try to raise funds from the public. Pre-registrations are being collected via Punakaiki's website.
The fund is 100% owned by its appointed manager, Lance Wiggs Capital Management.
It will invest in companies that have generated early revenues that validate their business model; have attractive revenue and growth curves and "create a sustainable competitive advantage through the clever use of internet, technology and/or design."
Mr Wiggs says he learned several lessons from the failure of Pacific Fibre last year; a primary one being he needed to sell people on the benefits of long term investing.
Lance Wiggs, PwC man break cover with capital management company
May 21: Entrepreneur Lance Wiggs and Chris Humphreys have formed a capital management company – and are hinting at long-term plays in the style of US hedge funds that can lock-in investor funds for a decade or more.
NBR understands Lance Wiggs Capital Management will try to raise around $30 million (the pair won’t comment on that point, or when a prospectus is due, citing securities law).
The duo have been planning the company since late last year, and just registered it with the Companies Office. Mr Wiggs owns 66.6%, Mr Humphreys the balance.
Yale MBA and McKinsey alumnus Mr Wiggs is best-known for his key advisory role to Sam Morgan on the $750 million sale of Trade Me to Fairfax. And, more recently, his position as a minority investor and manager of Pacific Fibre, which sought to raise $400 million for a Sydney-Auckland-LA cable (it folded in August last year).
Chris Humphreys was an associate director of Pricewaterhouse Coopers, and is the founder and managing director of Main Divide Gold. He also had a stint as finance manager for Pacific Fibre (he is no relation to similarly-surnamed co-founder John Humphrey).
“Chris is a farm boy from Southland and his first job was a digger driver on the Wes Coast. He's sharpened a few of the corners since then with some commerce and finance degrees,” Mr Wiggs says of his business partner.
Long, long term investment focus
Given Pacific Fibre looms large on both men’s CVs, it’s inevitable its failure will become a talking point.
Mr Wiggs says he learnt several lessons, including the need to better sell the concept of long term investing.
“With Pacific Fibre the financial model was always tricky in the first few years, but exceptional from about 2018 and onwards,” he tells NBR.
“We were unable to connect or convince enough investors to take a very long term perspective towards returns.”
Certainly, some of Mr Wiggs investments have been quick turnaround, such as Groupy, a daily deal site flicked off to Yellow while the sector was still hot.
But the Lance Wiggs Capital Management website is sprinkled with references to the benefits of long term investing. A 15-year horizon is mentioned as Warren “buy and hold for a lifetime” Buffett.
“The good news is that investors are a lot savvier now, with one example Milford's recent investment into Vend [in which Mr Wiggs also holds a small stake], and of course Xero's growth and market cap are hard to ignore,” Mr Wiggs tells NBR.
Lance Wiggs' Q&A with NBR
NBR: What is LWCM? A private equity fund? A hedge fund? A VC fund?
LW: LWCM is set up to be the manager for one or more of these and other sorts of funds.
NBR: Will you invest in start-ups, or mature companies or a mix?
LW: Chris and I have experience in each, but my recent experience and passion are with early stage technology, internet and design-led sectors. I've has helped found or invested in 17 early stage companies over the last few years, and also spent four years as a practitioner in the Better by Design programme .
NBR: Do you see a hands-on management or director role for yourself or Chris in the companies in which you invest?
LW: I'm best in small doses, and like to cede as much control to the board and the CEO as possible, making myself available for advice when the company sees it can benefit. I'm happy to take director roles as I feel the statutory obligations help maintain the focus on delivering to the goals of the company. But I am also happy to, and do, assist with companies regardless of status. I often get calls from early stage companies that I'm not invested in, a situation that I would like to be able to change.
With smaller investments I take a passive role, such as Vend, where there are high quality directors in place. 200Square and Pocketsmith, on the other hand, are a lot more early stage and I'm the sole external director.
NBR: Is there any equivalent fund, or whatever you are, in NZ at the moment? Is there any overseas outfit you model yourselves on?
LW: I cannot answer this question.
Offshore investors I admire include Andreesen Horowitz, Sutter Hill, Dave Swenson and the Yale Investment Office, Warren Buffet, Seth Klarman at Baupost and Elon Musk. Over here Sam Morgan, Stephen Tindall, Rowan Simpson, Craig Winkler and the Wilson family have made some very smart moves in recent years.
NBR: What did you learn from Pacific Fibre's failure?
LW: A lot, but let's focus on three things the strength of he internet economy, the raid growth possible in internet based businesses and the power of long term investments.
Firstly the general public response was overwhelmingly positive, showing that there was understanding of the latent need for higher speed internet and that technology and the internet are essential parts of our economy and society. I often wonder what would have happened if we went to retail investors, but we always figured that $3-400m was a bridge too far. The publicity didn't always help us with the investment community or customers, but then again it certainly opened a lot of doors.
Secondly I learned that we needed to translate between two very different industries. The internet based business industry takes rapid organic growth for granted - we were seeing data use of 56% growth per year going back and projecting forward at a much lower 35% per annum. The infrastructure and investment communities were used to dealing with much smaller growth numbers, and I don't believe we ever got across the point that we should be asking what could stop the growth rather than why it should continue.
I also failed to really drive the point home that telco-owned competitors are rational and that once a cable deal is away they will almost certainly purchase capacity in order to provide redundancy for their own networks. The good news is that investors are a lot savvier now, with one example Milford's recent investment into Vend, and of course Xero's growth and market cap are hard to ignore.
Finally with Pacific Fibre the financial model was always tricky in the first few years, but exceptional from about 2018 and onwards.
We were unable to connect or convince enough investors to take a very long term perspective towards returns. That's our fault, and ultimately we didn't make a deal happen, and we have to take the hit for that. However the team, customers and financial community all learned a lot in the process, and I am convinced that it's just a matter of time before a Trans Pacific cable gets away.
NBR: Will you list on the NZX or seek to raise funds from private investors?
LW: I cannot answer this question.