IPO activity in New Zealand dropped back in 2015 after two extraordinary years. Despite some doom and gloom headlines about recent market turbulence, secondary capital raising and trading activity on the NZX was strong, with a 20.1% year-on-year increase in capital raised. We expect an upturn in domestic IPO activity this year relative to last year, but not a return to 2013 and 2014 levels.
This publication explores current trends in New Zealand's equity capital markets (ECM) after an intriguing 2015 and outlines our expectations for 2016.
Expected trends in 2016
- An upturn in IPO activity from last year, but not a return to 2013 and 2014 levels.
- A more circumspect retail investor audience for private equity IPOs, reflecting the fallout from Dick Smith Electronics.
- More innovative transactions through use of the increased scope provided by the Financial Markets Conduct Act (FMCA).
- Strong growth in secondary capital raisings following a buoyant year in 2015.
- Further block trades, with a number of major shareholders coming off escrow this year.
- Greater use of pre-registration advertising to 2016 – New Zealand equity capital markets at a glance reduce the information imbalance between retail and institutional investors – a possibility created by the FMCA and encouraged by the Financial Markets Authority (FMA).
- More use of dual NZX-ASX listings following the extension of ASX Foreign Exempt status to NZX Main Board listed issuers.
- NXT Market, launched last year and targeted at SMEs, looks to find its feet in its second year of trading.
- Growing popularity of exchange traded funds to continue with, perhaps, challengers emerging to NZX owned Smartshares.
- Busy regulatory programme by the Ministry of Business, Innovation & Employment (MBIE), the FMA and the NZX.
Chapman Tripp has acted on most of New Zealand's recent ECM transactions, including acting on 14 (12 as issuer counsel) of the 22 IPO's and NZX Main Board listings in New Zealand since 2013. Our national ECM team is the largest and most highly regarded in New Zealand with a reputation for acting on the country's most significant and complex deals.
The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.