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Comments from NZ Super Fund and Direct Capital in relation to the 16 March 2017 NZ Herald story "Super Fund defends stake in roading contractor".

Direct Capital manages a number of private equity mandates on NZSF’s behalf including Direct Capital Fund IV, which has a 60% investment in Hiway Group. Through NZSF’s investment in Direct Capital Fund IV, NZSF has a 9.21% interest in Hiway Group. Direct Capital Fund IV has 27 investors including ACC, the Government Superannuation Fund and NZSF.

Statement from Direct Capital:

“The initial investment by Direct Capital IV was made into Hiway Group Limited (which has operations in New Zealand, Australia and Fiji) on 30 December 2011 with follow on investments in 2012, 2013 and 2014. Due diligence was undertaken at each investment.

As a manager of institutional funds Direct Capital IV is a signatory to the Principles of Responsible Investment, requiring it to assess the impact of ESG factors on all investment activity before making an investment. The investment due diligence did not highlight any areas of concern.

As part of its initial due diligence review and on-going monitoring Direct Capital is continuously reviewing these matters and formally reports to NZ Super and other Fund IV investors each quarter. Direct Capital formally provided comment to investors in March 2014 of a SFO industry investigation into Auckland Transport employees which started in late 2013.

Direct Capital has reconfirmed it is confident Hiway has at all times during the time of its investment acted to the standards expected of all investee companies. The industry investigation by the SFO has reviewed company records relating prior to and post the initial investment and no further action has been undertaken. In addition, Direct Capital, after further review, is not aware of any matter where the company has not met the standards demanded by its representatives.

Direct Capital remains comfortable that, during the period of its investment in Hiway Group, the company has not incurred expenses in relation to this. There has been no improper use of Direct Capital’s or its investors’ funds.”

NZSF comment:

“We retain confidence in Direct Capital and their investment processes, and have relied on their assurance to us that there has been no improper behaviour by the company during our investment period, nor any improper use of our funds. We oversee our managers’ investment activity and our managers are responsible for oversight of the underlying companies in their portfolios. We expect high standards of corporate behaviour from our managers and the companies they invest in on our behalf.”

 

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