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


Increased interest in exchange shopping


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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Trade: NZ Trade Deficit Widens To A Record In September

Oct. 27 (BusinessDesk) - New Zealand's monthly trade deficit widened to a record in September as meat exports dropped to their lowest level in more than three years. More>>


Animal Welfare: Cruel Practices Condemned By DairyNZ Chief

DairyNZ chief executive Tim Mackle says cruel and illegal practices are not in any way condoned or accepted by the industry as part of dairy farming.

Tim says the video released today by Farmwatch shows some footage of transport companies and their workers, as well as some unacceptable behaviour by farmers of dragging calves. More>>


Postnatal Depression: 'The Thief That Steals Motherhood' - Alison McCulloch

Post-natal depression is a sly and cruel illness, described by one expert as ‘the thief that steals motherhood’, it creeps up on its victims, hiding behind the stress and exhaustion of being a new parent, catching many women unaware and unprepared. More>>


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


International Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news