Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Increased interest in exchange shopping

DLA PHILLIPS FOX MEDIA RELEASE

11 March 2008

International capital markets survey points to increased interest in exchange shopping, diversity of funding, private equity

Trans-Tasman commercial law firm, DLA Phillips Fox, has today released the results of an in-depth international survey of major capital markets, conducted jointly with DLA Piper, one of the largest legal service organisations in the world.

The global study is the first of its kind and is based on interviews with the key financial decision-makers of 167 listed corporates and 33 investment banks from around the world, including Australia.

The study explores the rationale behind different capital markets' strategies that are driving key trends such as the shift towards private equity, from the perspective of corporates as well as investment banks, to identify any common trends across the various markets.

In announcing the findings, David Morris, Corporate Practice Group Leader in Australia, said: "The survey results highlight that as businesses go global they are adopting more sophisticated debt and equity initiatives and are increasingly looking beyond their local exchanges to achieve their desired outcomes."

New Zealand was not included in the survey. This was because of the scale of New Zealand’s capital market in global terms, because of the substantial integration of the New Zealand economy with the economies of the east coast of Australia and because of the trend of New Zealand issuers listed on the NZX to also have a primary listing on the ASX, said the head of DLA Phillips Fox’s New Zealand’s corporate practice in Auckland, Martin Wiseman. “The last two factors would suggest that the trends identified in the survey will be applicable to New Zealand,” he said.

► Exchange shopping is likely to become more popular

Over one in five companies surveyed indicated that they are less than satisfied with the

benefits they derive from their primary listing and approximately 10 percent of companies indicated that they have considered shifting their primary listing to another exchange.

Twenty-one percent of companies that had conducted their IPO in the past three years

indicated that they had considered an alternative exchange for their primary listing.

Australian companies were more likely than the global sample as a whole to have

conducted a secondary or dual listing on another exchange, with 38% of Australian companies having conducted a secondary or dual listing.

"While some Australian companies may seek to shift their primary listings offshore, the exchange shopping trend will also present the ASX with an opportunity to attract new listings, particularly from the Asian region," Morris said.

► Corporate governance is perceived to be providing little tangible value

The corporate sector, globally and in Australia, generally perceives that the specific governance regimes to which they are subject have not added much in the way of tangible value to their business particularly in light of the additional costs that result.

"Good corporate governance is not necessarily always seen to produce a discernable positive impact, whether in terms of enhancing transparency or tightening internal processes. Moreover, it is apparent from our survey that companies often feel that any improvements that are secured come at a relatively high cost," Morris said.

► The credit crunch may encourage a greater diversity of funding

Investment banks perceive that clients’ increasing interest in convertible debt is likely to grow further in the short-term. In the longer term, the credit crunch may act as a catalyst for the development of more creative funding techniques.

"Many businesses may start to look beyond their relationship bank lenders and to consider alternative capital sources including private equity, mezzanine and hedge fund capital," Morris said.

► Capital markets will increasingly be shaped by private equity strategies, hedge funds and the development of emerging markets

Investment banks believe that while clients may continue to be interested in accessing capital through private equity investment, private equity firms may need to be more flexible in their approach as many of the best acquisition opportunities will have been snapped up already. The pace at which emerging economies develop may also influence the direction and shape of capital markets and may create opportunities for the ASX to attract companies from these markets.

"One of the key factors that is likely to influence the shape of the capital markets landscape in the immediate future is how private equity firms respond to the challenges of the current market. Aside from the prediction that private equity firms will need to be more flexible, there may be some extension of geographic or sector targeting by private equity firms and there is also the potential for consolidation within the private equity market itself" Morris said.

► Generally buoyant markets over the last three years have masked the increasing tendency to resort to private sources of capital

The high level of activity within capital markets has masked a growing interest within the corporate sector for alternative approaches to achieve its longer term aspirations, in particular the consideration of private equity investments.

Nearly one in four companies in the Australian sample indicated that they have considered accessing capital via a private equity [or hedge fund] investment during the past three years.

ends


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Commerce: Supermarket Inquiry Finds No Breaches By Countdown

The Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, alleged by former Labour Party MP Shane Jones, has found nothing to warrant prosecution, although it warns supermarkets to take care in the way they communicate... More>>

ALSO:

Crown Accounts: English Flags ‘Challenge’ To Budget Surplus

Finance Minister Bill English is warning next month’s half yearly fiscal and economic update from the Treasury may not forecast a budget surplus, saying that returning the government’s accounts to surplus in 2015 will be “a challenge”, given the decline in commodity prices and weak global inflation. More>>

ALSO:

March 2015: Netflix To Launch In Australia And New Zealand

World’s Leading Internet Television Network to Offer Original Series, Movies, Documentaries, Stand-Up Comedy Specials and TV Shows for Low Monthly Price More>>

ALSO:

Price Of Cheese (Is Up): Dairy Product Prices Fall To Five-Year Low

Dairy product prices fell in the latest GlobalDairyTrade auction to the lowest level in more than five years, led by declines in rennet casein and skim milk powder. More>>

ALSO:

Gordon Campbell: On The Australians Scoring Trade Points Against Us With The Chinese

It hasn’t been a great year for Trade Minister Tim Groser... To top it off, Australia has just signed a FTA with China that has far better provisions on dairy exports than what New Zealand currently enjoys in our own FTA with China. More>>

ALSO:

Iwi & Local Consultation: Oil And Gas Block Offer 2015 Begins

Energy and Resources Minister Simon Bridges today announced the start of the Block Offer 2015 process for awarding oil and gas exploration permits. More>>

Industrial Action: Stats NZ Throwing Public Money Away Duplicating Data

The Public Service Association (PSA) says Statistics NZ are throwing money away by collecting the same data twice for official statistics such as the Consumer Price Index... As part of the ongoing industrial action, field interviewers who are PSA members are continuing to collect data, but are not sending it through to Statistics NZ. More>>

ALSO:

Other Stats:

Space: Rosetta's 'Philae' Makes Historic First Landing On A Comet

After more than a decade traveling through space, a robotic lander built by the European Space Agency has made the first-ever soft landing of a spacecraft on a comet. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news