PGC's Torchlight eyes infrastructure, financial services and real estate; downplays SCF

Pyne Gould Corporation's Torchlight fund sees a number of investment opportunities in areas such as infrastructure, financial services and real estate in both New Zealand and Australia, but is non committal on any further investment in South Canterbury Finance (SCF).

Managing director John Duncan told interest.co.nz Torchlight had been approached by more parties seeking investment than it had the ability to invest in. But he played down any further potential investment by Torchlight in SCF.

"We've got quite a long pipeline of opportunities that we have in front of the investment committee and really it's case of looking at each on its merits. I wouldn't want to highlight South Canterbury (Finance) in any particular way. There's a number of things we're looking at," Duncan said.

"We talk to a number of people fairly regularly. I wouldn't single them (SCF) out as being anyone we talk to more than anyone else."

Duncan said although Torchlight wouldn't disclose who the partners in its fund were, he could confirm that SCF owner Allan Hubbard, whose business interests aside from SCF are under government enforced statutory management and Serious Fraud Office investigation, wasn't an investor in the fund.

The Torchlight Investment Group announced last week that its Torchlight Fund No 1 LP had raised NZ$150 million, which could ultimately increase to NZ$170 million due to reserved allocations. Duncan says the money came from high net worth individuals and institutions. It plans to make counter cyclical investments at a time when money available from banks and financiers is scarce.

"The way to look at it is we are interested in areas such as infrastructure, financial services and real estate," Duncan said.

"But I wouldn't want to rule a particular sector in or out. The thing about counter cyclical opportunities is often those opportunities arise in areas that have hard assets or real assets. Things like real estate and infrastructure fall into that category."

Chaired by significant Pyne Gould Corporation shareholder and director George Kerr, Torchlight has already contributed NZ$15 million towards a NZ$100 million loan it arranged for SCF. It says the loan ranks ahead of the troubled SCF's debenture holders under the finance company's trust deed. The loan runs until November and means Torchlight has a prior charge on up to NZ$151 million or 7.2% of SCF  assets.

Torchlight Fund No 1 LP had been set to inject between NZ$22 million and NZ$37.5 million of equity into SCF through an arrangement with SCF's parent company Southbury Corporation. However, this deal failed to materialise after the Crown's consent, under SCF's Crown guarantee deeds under the New Zealand retail deposit guarantee scheme, wasn't obtained by May 31. This was after Southbury issued NZ$22 million worth of secured convertible notes to Torchlight on March 31 and used the proceeds to subscribe for NZ$22 million of new ordinary SCF shares.

SCF's trustee has now given the company until August 31 to find fresh equity. SCF chief executive Sandy Maier says the company needs about NZ$180 million.

Meanwhile, Duncan said the Torchlight fund's mandate allowed it to invest in both Australia and New Zealand. It also had additional investment interest above the NZ$20 million that would lift the total money raised by the fund to NZ$170 million, although he couldn't predict how much would ultimately be raised.

* This article was first published in our email for paid subscribers earlier today. See here for more details and to subscribe.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.