The New Zealand Superannuation Fund will invest up to $40 million into a $150 million fund aimed at expanding local companies.
Pioneer Capital in Auckland will manage the new fund, with cornerstone backing from the Super Fund and also from the New Zealand Venture Investment Fund, which is contributing $19 million.
Pioneer Capital was established in 2005 and has invested in companies such as Orion Health, Moa Group and the recently-listed SLI Systems.
Pioneer Capital's managing director Randal Barrett says the remainder of money for the fund will come from a wide range of New Zealand institutional investors and a few high net worth investors.
He says the fund will particularly look to invest in local businesses exporting high value products.
"The vast majority of our businesses are private, and that creates a really good opportunity to invest."
Mr Barrett says a natural path for companies that are growing is to eventually list and he says as a long-term investor, Pioneer Capital is comfortable with that.
He says he expects to invest in about three companies a year through the new fund - which takes the Pioneer Capital's funds under management to more than $200 million.
New Zealand Superannuation Fund general manager of investments Matt Whineray says it's a good opportunity to put money towards companies that are a little too small for the stock market but need growth capital.
"The expansion capital space is never going to be a very big part of the fund, but it is a way for us to invest in that New Zealand specific opportunity."