Capital injection set to launch Bayleys on expansion path

Leading New Zealand real estate agency and professional property services provider Bayleys has this week successfully completed the first stage of a major expansion programme which will see the company significantly increase the scope and scale of its operations throughout New Zealand.

The growth programme will be based around increasing scope and depth of agency services Bayleys provides for its clients throughout New Zealand – particularly in the realms of property management, valuations and advisory, and funds management.

Bayley Corporation managing director Mike Bayley said this expansion had already commenced – both with the growth of the company’s valuations team in Wellington, and increasing turnover from the firm’s steadily developing commercial property management group.

“To support this continued growth, Bayley Corporation Ltd has brought in a new shareholder to the business, taking a minority stake. That new shareholder is a company called Direct Capital. Direct Capital managing director Ross George will join our board. However, I stress that the majority interests of Bayley Corporation Ltd will remain within Bayley family ownership,” Mr Bayley said.

Direct Capital has a proven track record of investing into large, privately-owned businesses such as Bayleys. In recent years, Direct Capital has invested in such companies as New Zealand King Salmon, Rodd & Gunn, Ezi Buy, Ryman Healthcare, and Max Fashions. Direct Capital invests into these private companies to help them grow and become even more successful.

Direct Capital has been investing in private companies since 1994. Its investors over that time have included such institutional investors as the New Zealand Superannuation Fund, AMP, AXA, and large pension funds and community trusts.

“Introduction to this wider circle of commercial influence will enable Bayleys to increase its profile and dealings with large institutions and corporates,” Mike Bayley said.

The investment coming from Direct Capital will be used exclusively for expansion initiatives across those companies coming under the Bayley Corporation umbrella – most notably Bayleys Franchis Group, Bayleys Property Management, Bayleys Valuations and Advisory, and Bayleys Real Estate agency operations.

In signing the investment partnership with Bayleys, Direct Capital managing director Ross George said his company was attracted to Bayleys on three counts.

Its profitable operating track record over a lengthy timeframe
Its strong professional management – from director level through to franchise owners, and front-line managers

The long-term and sustainable competitive advantages which Bayleys enjoys over its competitors, and the resulting growth opportunities from this market dominance.

“Bayleys is a company that Direct Capital has followed over a number of years, and a company that has continued to perform exceedingly well through this cycle - confirming the strength of its brand, outstanding management, and market position in New Zealand,” Mr George said.

“Our investment in the Bayleys brand not only provides a capital input allowing the company to grow and expand, but also broadens the shareholder base from the family to now include institutional capital - an important part of continuing to grow the business,” Mr George said.

“The professional property management and services sector is a significant part of the economy, and Bayleys is fast emerging as the leading service provider within this market.”

Mike Bayley said the real estate agency and professional property services markets would see a growing Bayleys presence across the wider property sectors – truly enhancing the company’s brand promise of being New Zealand’s leading full-service real estate agency.

Mr Bayley said there would be no change to the day-to-day operations of any of the Bayley Corporation Ltd companies, other than Bayleys staff and clients would begin to see a wider range of product and services being offered by the company - all of which would significantly enhance Bayleys’ current offerings.

“The board of Bayley Corporation Ltd and I are excited about the future growth opportunities that lie ahead, and the resulting broader horizons which have materialised as a result of our new partnership with Direct Capital,” Mr Bayley said.
Notes to Editors:

Direct Capital was established in 1994 and is owned by its senior executives. Its investment team has been together an average 14 years of its 16 year history. Since 1994, Direct Capital has raised more than $800million to invest in private companies.

Direct Capital’s latest fund, Direct Capital IV, completed its fund raising in December 2009 raising $325million to invest in private companies over the next 3-4 years. The New Zealand Superannuation Fund is a significant investor in the fund. The investment in Bayleys is the second investment made from Direct Capital IV.

Investments in its Direct Capital III fund (invested between 2005 - 2009) include: online book retailer Fishpond, New Zealand King Salmon, Rodd & Gunn, GoBus, Shears & Mac4, Innovair, Triton Hearing Clinics, Stratex Group, Max Fashions, New Zealand Pharmaceuticals, and Express Logistics.

Previous investments include Ryman Healthcare, Nobilo Wines, Airwork, EFTPOS NZ, Tasman Building Products, EziBuy, PC Direct, Blue Star Group, and Moore Australasia.

The private company market in New Zealand is very large, approximately 3,500 companies with annual revenues of $10million or more. Direct Capital generally invests in companies with revenues between $20million and $200million, of which there are approximately 1500 in New Zealand.