News
GFG attracts $3m investment
7 February 2005 / Dominion Post - By Tom Pullar-Strecker
Venture Capital firms Endeavour Capital and TMT Ventures have pumped $3 million into Auckland-based payment software firm GFG Group, in return for a 19 per cent stake in the privately owned firm.
Endeavour and TMT Ventures are part of the Government's VIF-scheme, meaning taxpayers now have a $1 million interest in GFG.
Under the VIF scheme, state-owned New Zealand Venture Investment Fund invests $1 in hi-tech firms for every $2 put in by accredited venture capital funds - in return for a limited share of the upside of the investment. The scheme effectively subsidises the risk taken by venture capitalists.
Unlike many of the 12 other businesses that have so far received VIF funding, GFG is no spring chicken.
The company developed card management software system GFG:UniCARD for ASB Bank in 1989 and its software is now used in 16 countries as far away as Russia, China, Costa Rica and Malaysia to handle the issue and management of more than 14 million debit, credit and loyalty cards.
GFG bought back the intellectual property for GFG:UniCARD from multinational Unisys last year and now has its eye on the mobile payments (m-payments) software market - hoping its technology will be used to let people buy goods and services using cellphones and on the Internet.
The company employs 40 staff at its research and development base in Auckland and in offices in Wellington, Melbourne and Manila.
Chairman Ralph Green says the capital injection will be used to fund growth.
"In order to meet our customers' needs as well as take advantage of new growth opportunities, we need to move faster. That means investment capital, rather than incremental growth funded from our own cash flow."
Endeavour Capital managing director Mark Dossor says its decision to invest was primarily based on favourable feedback from GFG's customers and the fact it had a proven product in a secure, international niche - as well as opportunities in the m-payment space.
"Our initial investment of $3 million is prudent. There's more investment capital if that's what's required to maximise the opportunity."
Kory Fagan, investment director of TMT Ventures, which is a venture capital company backed by Telecom, says GFG has "one of the world's leading mobile payment systems".
"The customer view was also that GFG's larger competitors weren't providing a good level of service and product flexibility to small and medium-sized national banks, or to new players such as Tescos and finance companies.
"We were also impressed with the quality of the management team, their plan for growth and the company's track record of profitability."
Anthony Howard, a former boss of Wang New Zealand, which has since morphed into Telecom-owned Gen-i, has been appointed managing director of GFG.
