Financial system

A financial system that provides firms with adequate access to finance on acceptable terms is crucial to enabling the country to achieve its full economic development potential. It is therefore important to monitor the health of the country's financial system, to ensure that policy settings are appropriate.

With that aim in mind, the Ministry of Economic Development has initiated a broad research work programme aimed at improving our understanding of New Zealand's financial system and, in particular, how effectively it facilitates access to finance by firms.

To do this requires study of the financial system from two perspectives:

• the demand for capital by firms; and
• the supply of capital by investors, including banks, finance companies, venture capital funds and individual investors.

The New Zealand Venture Investment Fund Limited (NZVIF) has been selected by the New Zealand Government to implement the SCIF programme.

The key features of this new initiative are:

• SCIF will invest alongside selected private investor groups ("approved investors")
• SCIF will act as a passive co-investor;
• SCIF will invest up to 50% in any single eligible investment.
• only seed-stage and start-up investments will be eligible for the Seed Co-investment Fund;
• investments by the SCIF would be limited to a maximum single round of initial investment of $250,000 in any one company or group of companies;
• SCIF will operate for a period of 12 years in total, with an expected investment period of 5-6 years;
• a total of $40 million will be available for investment by SCIF over a 5-6 year period.

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