Risky ventures may boost CCC assets
The Canterbury Development Corporation is hoping its investment in entrepreneurial businesses will boost the assets of the Christchurch City Council, though admits they are risky.
CDC has about $6 million invested in 12 local entrepreneurial companies, including robot inspection company Invert Robotics, food technology firm Veritide, solar lighting company Solar Bright, and Hydro Works which makes large turbines for the energy industry.
CDC, the development arm of the Christchurch City Council, supports and invests in innovative companies in partnership with the Government through the Ministry of Business, Employment and Innovation and with Callaghan Innovation, Crown research institutes and universities.
The CDC company that supports entrepreneurial businesses and ideas is called CRIS. In its statement of intent, CRIS says that its investments in several local start-ups will be transferred in the next three years into powerHouse, a company using public and private money to help develop innovative businesses, which is intending to list on the New Zealand Stock Exchange.
CDC chief executive Tom Hooper said powerHouse listing on the NZX would make it easier for investors to get their money back from technology start-ups.
CDC would find it easier to turn its current spending on the tech group into a ‘‘simple equity investment’’, Hooper said.
CRIS was both a small shareholder in the overall entity of powerHouse and also had money in its start-ups. It invested in powerHouse ventures to support their growth rather than to profit from them, Hooper said.
It was hard to know how well the businesses would do, or at what point CRIS could sell out of them, but it wasn’t risky like trading options, he said. ‘‘Our investment is really important because it helps underwrite and gives confidence to the external investors who can then come in and invest as well.’’
As other investors came on board, CRIS’s proportion of capital spent on powerHouse start-ups was falling over time.
None of CRIS’s spending was ‘‘millions’’ and it was not speculative, Hooper said. CRIS’ input into the most recent venture was 10 per cent of the money raised.
CRIS had been backing powerHouse on the basis that its ventures might not be commercialised without its support, in other words as an angel investment.
Transferring its portfolio of investments to a restructured powerHouse would ensure ‘‘that powerHouse will have the asset base required to progress its plans to raise capital on a much larger scale and ultimately become selfsustaining’’, the CRIS SOI said.
CRIS has ‘‘agreed to retain its shareholding in powerHouse to support the company through to the achievement of a public listing and beyond, as required to ensure the success of the listing process’’.
The company expected ‘‘a noncash uplift that will provide some balance sheet and ratios benefit to CCC as the ultimate parent company’’ but the process involved significant risks, the SOI said. It’s interesting how Government Budgets are given labels in an attempt to sum up their overall theme. Notable mentions for interesting soubriquets include Arnold Nordmeyer’s ‘‘Black Budget’’ of 1958, Ruth Richardson’s ‘‘Mother of All Budgets’’ in 1991, and Michael Cullen’s ‘‘Chewing Gum’’ budget of 2005 (the latter a reference to the value of the proposed tax cuts).
Budget 2015 attracted a number of names, including the Greens’ Metiria Turei’s somewhat unimaginative ‘‘block of cheese’’ comments and Winston Peters’ more colourful Split Enz Budget (‘‘I See Red, I See Red, I See Red’’).
The surprise of this year’s Budget was the announcement of significant increases in social spending, representing the first real increases in 43 years. While it can be argued that the increases did not go far enough (and there were vociferous protests afterwards making that point), the