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

 


NZX plans new market with fewer rules to lure smaller firms

NZX plans new market with fewer rules to attract smaller companies, replacing NZAX

By Suze Metherell

March 18 (BusinessDesk) – NZX, New Zealand’s stock market operator, plans a new market with less disclosure obligations to attract smaller companies, eventually replacing the New Zealand Alternative Market, the NZAX.

Wellington-based NZX launched the alternative index in November 2003 to target small to mid-size growth companies. It has 18 stocks with a market cap of $479.8 million and has declined 9.8 percent the past year, lagging an 18 percent gain in the benchmark NZX 50 Index over the same period.

“AX didn’t work as well as we would have hoped it would do,” Aaron Jenkins, head of markets at NZX, told BusinessDesk. “The short-term plan is to grow a successful new market but over time, assuming we do a good job of it, we’d expect to retire the AX.”

Rules for the new market would be more lenient to reduce costs and attract companies with a market cap between $10 million to $100 million to list. Companies will be able to use key operating metrics to outline their business performance instead of more onerous prospective financial information requirements in their projections, and will be required to disclose information to investors periodically rather than continuously, according to draft rules released for consultation by NZX.

“The intent behind the two markets is similar in that they’re targeting growth companies,” Jenkins said. “The big difference with this market, which is intended to properly differentiate itself from the main board, is that it will reduce the obligations at IPO times and the requirement of prospective financial information, which we expect would be a significant cost reduction in terms of advisory fees.”

Wool Equities, which is in the process of de-listing from the alternative market, cited the significant cost of maintaining a share register under the listing rules as one of the reasons for its departure. Once the new market is established NZX would expect NZAX listed companies to migrate to the new market.

The new market will have a different website with distinct branding from the NZX and a risk warning where investors “acknowledge difference between the new market and other NZX markets”.

“The reality with the AX was that it never properly differentiated itself from the main board,” Jenkins said. “Investors in this market will be aware that they’re investing in a stock that is potentially going to be higher risk and therefore need a health check or a health warning to do that.”

NZX’s capital markets business accounts for half of the company’s revenue. Last year it benefited from 10 new listings worth $7.5 billion as the government partially privatised energy companies and privately owned businesses such as Z Energy, SLI Systems and Synlait Milk also publicly listed. The boom is unlikely to be repeated in 2014 as the government has just one smaller asset, Genesis Energy, slated for listing this April and the remaining offerings are expected to be much smaller.

Shares in NZX recently traded at $1.26 and have gained 1.6 percent this year.

Submissions on the new market draft rules are due by April 4.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Balance Of Trade: NZ Posts Trade Deficit In October On Falling Dairy Exports

New Zealand’s posted its largest monthly trade deficit for October in six years, while narrowing the shortfall from September, led by a fall in dairy exports to China while all main imports into the country rose. More>>

ALSO:

Gigatown Winner: Plenty Of Positives For Dunedin

Although the city has taken the Gigatown title, along with new ultrafast 1Gbps broadband and funding for $700,000 worth of UFB-related initiatives across the community, Mr Cull says Dunedin has gained so much more through its involvement. More>>

ALSO:

R18: The Warehouse Group Praised For Removing Games

The decision by New Zealand’s largest retailer The Warehouse Group (TW Group), to withdraw stocks of the latest version of Grand Theft Auto V (GTA V) and other R18 games, has been praised by advocacy group Stop Demand Foundation. More>>

ALSO:

Air NZ Wine Awards: Victory For Villa Maria As Pinot Noir Thrills

It was a night to remember as Villa Maria Estate picked up one of the highest accolades of the evening, the O-I New Zealand Reserve Wine of the Show Trophy, at the 28th Air New Zealand Wine Awards. The Villa Maria Single Vineyard Southern Clays Marlborough ... More>>

ALSO:

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:

Get More From Scoop

 
 
Standards New Zealand

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