Tougher admission rules to hit NZ companies with ASX listing 21 Jul 2016
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
- NZ economy expands at fastest pace in two years Business
- New Zealand food prices fall in February Business
Thursday 21 July 2016 10:40 AM
Tougher admission rules to hit NZ companies with ASX listing plans
By Fiona Rotherham
July 20 (BusinessDesk) - New admissions rules by the Australian Stock Exchange represent a new hurdle for the accelerating number of New Zealand companies listing across the Tasman.
In the past three years, the number of kiwi companies either sole or dual-listing on the ASX has more than doubled to 46 and another half dozen or so are said to be following suit this year. There are 36 Kiwi companies dual-listed on the ASX compared to only eight Australian-based ones on the NZX.
The rate of New Zealand companies listing in Australia has sped up since last September after the ASX amended its listing rules to allow those listed on the NZX main board to be recognised under a New Zealand foreign exempt listing category, meaning they don't have to issue a prospectus.
But minimum admission requirements in the ASX’s new rules, which it’s now discussing with the Australian regulator, will make it harder for early-stage companies with limited revenue to list. The changes will capture kiwi companies listing under the foreign exempt category.
The proposed changes follow an Australian Securities Investment Commission review into defective disclosure in IPO prospectuses and poor due diligence, mainly among small to mid-sized issuers. There has been a trend towards early-stage tech listings on the ASX and almost half of those companies floated in the past two years had revenues under A$1 million.
The planned changes, due to come into effect on Sept. 1, increase the financial thresholds required by companies listing to at least A$500,000 of profit, net tangible assets of A$5 million or a market capitalisation of A$20 million. In addition, a minimum free float requirement of at least 20 percent of shares will be introduced and minimum share parcels for each security holder will rise to A$5,000.
Max Cunningham, the ASX general manager of listings and issuer services, said start-ups should avoid listing too early.
“There’s a lot of learning from boot-strapping the business and getting equity and loans from friends and family and venture capitalists.”
Kiwi companies likely to list on the ASX in the next six months – Powerhouse, HydroWorks, CropLogic, Pushpay, and NZ King Salmon – are expected to do so under the foreign exempt category, which covers 24 New Zealand companies on the Australian exchange. Jewellery retailer Michael Hill is also changing its primary listing to the ASX.
New Zealand companies “quite rightly want to access a broader pool of capital and a lower cost of capital”, Cunningham said.
A 2014 Orient Capital study the ASX commissioned claimed an Australian listing enabled NZ companies to access an investment pool of A$241 billion, five times the funds available to those solely NZX-listed. The market value of securities on the ASX is A$1.6 trillion compared to the NZX’s $122 billion. Many Australian managed funds are also constrained to only invest in Australian-listed entities.
It’s not just New Zealand companies seeking to sole list on the ASX, Cunningham said, with companies from Singapore, the US, and Israel also attracted to seek investors with an appetite for risk.
Originally, technology incubator Powerhouse had planned an NZX listing but decided instead to seek a sole Australian listing through a planned A$20 million IPO in August or September because of its bigger capital markets, said chief executive Stephen Hampson. It has managed to raise only a third of the $15 million it sought in New Zealand in pre-listing capital. It also wants to raise its profile in Australia where it’s about to seal its first deal to commercialise research from an Australian university or research institute.
According to a Forsyth Barr report in March, Australian dual listings are now 78 percent of companies on the S&P/NZX 50, up 28 percent since 2012. Australian investors are also contributing to the near record level of foreign portfolio ownership of the New Zealand equity market, which hit 46.3 percent at the end of last year.
Hartley Atkinson, founder of Auckland-based drug-maker AFT Pharmaceuticals, said it dual-listed last year because it does more business in Australia than in New Zealand though the bulk of its shareholders are based in this country.
“The Australian institutions that have invested are still important. They make a difference,” he said.
Cunningham wouldn’t respond to recent comments from NZX chief executive Tim Bennett who compared local companies listing across the Tasman to “welcoming Australians into an All Blacks training camp and allowing them to take our best players”.
“We have a high regard for the NZX and wouldn’t have a New Zealand foreign exempt category if we didn’t,” Cunningham said.
Bennett said the local market “wasn’t broken” and that listings of Kiwi companies fell into two categories – mid-sized to larger companies dual-listing to access a much bigger capital pool and smaller, early-stage companies sole listing who had “effectively exhausted the sources of capital from New Zealand investors”.
Companies dual-listing is not “a threat by any means” because most of the share trading and price-making of their stock is still done on the NZX, he said. Year-to-date, NZX had traded 70 percent of the value of the top 10 dual-listed stocks and this figure has not changed significantly over the past few years, he said.
However, he admitted more work needs to be done by the entire eco-system – brokers, fund managers, bankers, and investors - to get the capital needed for early stage companies in New Zealand that are turning to Australia.
The NXT market, set up specifically last year with less onerous rules for high growth companies, has only attracted four listings to date although Bennett said he had been saying until “I’m blue in the face” that he was happy with its development.
“We have to measure the success of that in three to five years by the capital raised and type of companies it has attracted,” he said.
(BusinessDesk)
ends
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more