NZX chief executive Mark Peterson, NZX chair John McMahon, MP Andrew Bayly, NZX deputy chair Dame Paula Rebstock and business leader Martin Stearne. Photo: Nona Pelletier / RNZ
The NZX capital markets continue to shrink, with another couple of long-time public listed companies set to go.
The NZX received two takeover notices over the past week for carpet maker Bremworth and fast food operator Restaurant Brands, with the value of offers at substantial premiums to last listed prices.
The low listed prices were an indication of the underlying problems dogging the NZX, with investors increasingly favouring United States-listed companies.
Still, investment platform Sharesies co-chief executive Leighton Brooks said overseas investors were clearly seeing value in New Zealand companies.
"I think there's still a real opportunity there in the future, but there's just a couple of things that need to be worked through first, and some of that is just the price discrepancy between what these takeovers are coming in at versus what they're being priced at on our market."
Takeovers had taken Manawa Energy, Marsden-Maritime Holdings, small telco Vital and NZ Windfarms, while others migrated solely to Australia such as NZ Oil and Gas, Ampol and Xero.
Just Life Group founder and chief executive Tony Falkenstein delisted Just Life from the NZX last year and said the company had since saved $400,000 in compliance costs.
"The reason why the NZX is not growing is people can raise funds a lot easier and at much less a cost," Falkenstein said.
"People say, 'Hey, why should we go all that expense when there are so many other sources of finance?'
"That makes it very difficult for the NZX to increase its number of companies."
The number of new listings had been few and far between over the past decade since 2014 when NZX celebrated its 16th listing with the ringing of a bright and shiny new bell.
The last significant share floats were Vulcan Steel and Winton Land several years ago.
But the bell was rung again late last year when former government minister Andrew Bayly enthusiastically announced a package of changes aimed at turning the market around, based on recommendations made in a report commissioned by the NZX and Financial Markets Authority.
The 2019 report by business leader Martin Stearne set out a number of changes to encourage growth in the markets.
However, Bayly resigned his ministerial posts a couple of months later after a number of political missteps, leaving planned reforms in the hands of his replacement, Commerce Minister Scott Simpson.
Brooks said the NZX would benefit from greater investment by KiwiSaver fund managers, which would increase the liquidity in the market, and perhaps support market growth.
"As we move forward and KiwiSaver funds get bigger, how much of that should we expect as investors into New Zealand, both in capital markets and ongoing discussions around infrastructure and the likes where Australia, for example, have seen a lot of benefit," Brooks said.
Falkenstein said the NZX should be merged with the Australian Stock Exchange (ASX), which was much larger and offered more liquidity.
"Not that many exchanges are growing at all around the world, and it is probably time we should really consider being part of the ASX," Falkenstein said.
Simpson said the government was keen to see growth in New Zealand's capital markets.
The most recent change was to make the inclusion of prospective financial information (PFI) optional for companies wanting to raise capital on the market.
The PFI was considered a high hurdle, with the estimated cost to produce ranging from $150,000 to $500,000.
In addition to the Investment Boost announced in the latest budget, Simpson said government had also consulted with business on making adjustments to the Climate Related Disclosures regime and enabling investment in Private Assets by Kiwisaver providers.
"I will have more to say on these shortly."
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