Mark Peterson of NZX.
As New Zealand Stock Exchange, Te Paehoko o Aotearoa, we always want to be seen as the natural home for Kiwi businesses who want access to capital to help them grow and achieve their ambitions for the future.
I am also aware of the importance of local financial markets in ensuring domestic investors easy and quick access to the wonderful portfolio of local businesses.
EY’s Global IPO Trends Report shows that, on average over the long term, over 90% of issuers list on their national stock exchanges – cultural and strategic fit being key considerations, along with recognition of brand and investor familiarity. And, often, it’s just DNA – the essence of your business.
New Zealand has a relatively large retail investor base, and over the past year we have seen the largest re-engagement with equities as an investment class in the past 30 years.
Retail participation has been at levels never seen before in our sharing market, aided by the growing popularity of online trading platforms – Jarden Direct, Sharesies and ASB Securities – which allow easy and low cost access for DIY investors.
This is positive for our market and stimulates interest and investment among our issuers.
Presenting the award for Best Emerging Investor Relations to Pacific Edge CEO David Darling at this month’s INFINZ event, I couldn’t help but think about how great it is that Kiwis can have leading innovators like Pacific Edge right in front of them, and at their fingertips, as an investment choice on NZX.
Pacific Edge has surged in value over the past year to reach a market cap of around $ 860 million, breaking new ground with the innovative Cx bladder cancer diagnostic tests. Although their primary market is in the United States, they have been mindful to tell their story and educate local investors about the importance of these diagnostic tests, and educate them on how doctors are embracing the news. technologies and the functioning of the health care market in the United States.
Serko’s Darrin Grafton also expressed his passion for NZX at the INFINZ Awards. Accepting the 2021 Leadership Award, the CEO of Australasia, a leader in travel and corporate spending solutions, thanked for the recognition of the company’s achievements – and set additional ambition for a company that has raised $ 22 million from its IPO in 2014 and now worth it. over $ 710 million.
Darrin said: “If you think what Serko has achieved today is great, then you better get ready – because I’m creating one of the best New Zealand tech stories and keeping it Kiwi here on the NZX. “
In some cases, there can be significant advantages in terms of credibility in global markets or social license in the home.
Former Pushpay Holdings CEO Bruce Gordon said listing on the NZX was an instrumental stepping stone for Pushpay, helping to give credibility to ‘crazy kiwis with big ideas’, giving their biggest potential customers trusting their due diligence and creating a sense of transparency.
Grant Rosewarne, Managing Director and CEO of New Zealand King Salmon, said they wanted to be “… as Kiwi as possible”.
“At King Salmon, we recognize that we will only have the social license to grow if we connect well with our communities, if we take care of our environment and if we operate according to the best practices in the world. Through our registration on the NZX, we were able to do all of these things. “
During this past extraordinary year, we have had a unique opportunity to demonstrate to other companies the value of having access to capital through our public markets.
2020 has been a difficult year for many sectors of the economy, but with these challenges, the value of easy access to capital has been so evident for New Zealand businesses – by carefully examining their balance sheets, thinking about financing. and the diversification of funding.
The Covid pandemic has bolstered the value of an NZX listing, and the access to equity or debt capital that listing on NZX provides.
This shows that New Zealanders and international investors are ready to support the right companies.
The total of more than $ 5 billion in capital raised in the secondary market in the 90 days since the start of April last year has eclipsed capital raising in the first months following the global financial crisis of 2008. This need and the greater attractiveness of equity financing is reflected in the total value of capital raised for the year $ 17.6 billion – more than 50% above our expectations for 2020.
It’s been fantastic to have been busy ringing the list bell to welcome a new cohort of companies to the New Zealand Stock Exchange – with nine in 2020 and four so far in 2021, including the latest DGL group. , who joins us this week. NZX is seen as the place to come for capital and there is a wide range of opportunities that present themselves in the market in different ways, reflecting the options that we have opened up.
On market liquidity
Since the resetting of the NZX strategy in 2017, there has been a relentless focus on removing bottlenecks and creating a platform for growth – for NZX and our markets. The introduction of new market players has opened up access to a wider range of investors, while changes to NZX’s rules and fee schedules have boosted market activity and improved liquidity on the exchange.
It is encouraging to see market growth across all investor segments, with the value of traded cash from retail and institutional sources accounting for around 18% and 82% respectively. Along with the increase in the value traded on the NZX, we continue to see an increase in market activity and execution through the central limit order book managed by the exchange.
The proportion of market transactions last year accounted for 62 percent ($ 33 billion) of total transaction value, and market transactions have normalized above 60 percent. This greater liquidity in the market contributes to market efficiency and price discovery and has resulted in improved prices for all investors.
Increased liquidity, with more low-value transactions, has other benefits, as the price differential is constantly tested – and those benefits translate into better price formation. It shows companies and investors that our markets are healthy, dynamic and attractive.
NZX is considered the place to raise capital, and our pipeline has never been stronger. This includes the possibility of large-scale stock quotes – prospects that could positively impact the NZX and New Zealand capital markets more generally.
Our efforts continue to focus on promoting the New Zealand market to companies that may benefit from access to capital or to owners who wish to free up capital for other purposes – now or in the future.
The Capital Markets 2029 report clearly highlighted this broader opportunity for current private companies to use the listed market to access capital, with around 1,200 private companies in New Zealand with annual revenues of over $ 30 million. .
We see enormous potential to continue to develop the listed market to support the growth of these companies, which are major employers of Kiwis and collectively, great contributors to the New Zealand economy.
What we’re hearing from our engagement with business owners is that businesses across New Zealand are thinking about access to capital – in all its forms, private, public capital, debt, equity – in especially in a world of so much uncertainty.
Opportunity and optimism
Every day we see examples in front of us showing that the spirit of innovation and ability of the Kiwis is alive and well in our economy, and that the appetite for capital is largely growth driven or opportunistic.
We have fantastic talent and optimism here in New Zealand, people who do amazing things – they come to talk to us at NZX when they are like, “How do I move my business forward?” Whether it’s growth and expansion, or downsizing, we can help them work on the options.
Some have always dreamed of having their company’s ticker on the New Zealand Stock Exchange, others have a scale which means listing makes a lot of sense – and in some cases it’s all about planning the relieves.
In these conversations, NZX’s role is to listen and understand the goals and drivers, so that we can support businesses in the best possible way and connect them with the right partners and advisors.
There is a new benefit in these discussions after Covid, with a clearer focus on planning for major uncertainties and unforeseen events. But there is also a demand for access to capital to help growth while maintaining a strong sense of belonging, of patriotism – that “being Kiwi” is more important than ever, and investors and businesses want to do. good to New Zealand.
It is also at the very heart of what the New Zealand Stock Exchange has always been, from our origins in the 1860s, where the Dunedin Brokers’ Association had a vision of a meeting point that enables equal opportunity. and access for local buyers and sellers.
Today, our publicly traded companies continue to provide that vital blood, the opportunity for New Zealanders to invest and share in the success of the businesses they know and trust – productive assets that create jobs and supply the engine room of their country of origin and tax jurisdiction.
The industry-led 2029 Capital Markets Report captured the importance of our capital markets.
This is reflected in our vision at NZX to “Help build New Zealand tomorrow” – to grow New Zealand’s economy and support the resilience and long-term success of Kiwi businesses as a force for our country.
Mark Peterson is CEO of NZX
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This notice was published: 2021-05-27 17:47:31