Punakaiki Fund still has grand plans to launch an initial public offering to take the venture capital investment vehicle to the next level, but that isn’t on the cards for a few years yet.
The Catalist-listed VC fund introduced a capital allocation policy in the March 2025 year and is in the process of distributing its recent payday from the sale of Quantifi Photonics, but never planned on making those cash returns before it went public.
Chair Mike Bennetts told shareholders in the fund’s recently released annual report that the distribution policy was the result of ongoing delays to a planned IPO, which was a goal from day one when the fund was launched more than a decade ago. Punakaiki now sees a potential IPO as coming within the next three-to-five years.
Bennetts said the two roadblocks to the fund hitting the scale needed for an IPO are capital raising and growing the portfolio’s company valuations.
“Valuations are largely beyond our control, as they rely in part on global market prices,” Bennetts said in his report. “However, our influence comes from investing well in the first place, ensuring any follow-on money is well spent, and contributing to the portfolio companies’ performance through directorships or other forms of input.”
The fund’s 1,100 or so investors backed delaying an IPO until the fund hits $200 million in a survey last year, and in Punakaiki’s May update it signalled plans to buy back 10% of its shares on issue after the Quantifi sale.
Crossing the t’s
The buyback needs a ruling from the Inland Revenue Department and isn’t expected to happen before September. Investors preferred dividends in last year’s survey, although principal Lance Wiggs noted the tax efficiency of share buybacks at the time.
Bennetts said the fund stands behind its investor net asset values – $33.23 per share as at May 31 – and will make its returns at that price.
“We expect the scale of this capital return, and our intent to establish a market support programme that allows the manager to buy back shares under a treasury stock programme, to significantly narrow the discount between iNAV and the auction prices on the Catalist platform each quarter,” he said. “We anticipate the treasury stock programme would be a reasonably small percentage of our cash at any particular time, but see that it should have a strong supporting element to the share trading based on our analysis of recent trading windows.”
The fund’s focus for the March 2026 year is to maintain its compliance standards, raise more capital than it has previously, and lift returns towards its 20% target over a rolling five-year period.
About 2% of shares have been traded each year through its trading windows on the Catalist, with an average of three auctions a year. The next trading window is expected this month, and the shares traded at $24.99 in the previous event.
And dotting the i’s
Punakaiki is seeking to boost liquidity on the junior bourse with a new market support share trading policy where the fund can buy and sell its own shares, up to a maximum of 5%, holding it as treasury stock to be reissued to new investors when it raises capital.
It will also seek to promote more trading beyond existing shareholders, and work with Catalist to make the online auction process easier to understand.
The reasons for going public remain the same with an IPO seen as boosting Punakaiki’s liquidity, which makes it easier for active investor plus visa holders to exit or rebalance their portfolios within visa’s three-to-five-year investment term.
It will also create another avenue for retail investors to get exposure to local technology companies, and provide Punakaiki with a broader and deeper source of capital.
“Encouragingly, there remains strong interest and preparedness to invest in or support a listed venture capital fund, particularly given several successful global precedents over the past decade,” Punakaiki said in its report. “This ongoing market engagement is a critical part of our strategy, leading up to and beyond any future IPO.”
Reporting by Paul McBeth. Image from Dan Taylor on Unsplash.
