Top stock rallies behind NZX
Medical device company Fisher & Paykel Healthcare – the most valuable Kiwi company on the NZX – has ruled out following hi-tech darling Xero by delisting from the stock exchange.
Xero’s decision to quit the NZX and consolidate its share trading on Australia’s ASX has caused ripples within the financial community, with Kiwi brokers set to lose millions of dollars a year in transaction fees.
Like Xero, F&P Healthcare is currently dual-listed on the NZX and the ASX and earns most of its revenues from export markets.
F&P Healthcare investment relations head Marcus Driller said it had not and ‘‘would not’’ consider ditching its NZX listing.
‘‘We have been able to grow strongly with that NZX listing and would feel that any change would not be in the best interests of our New Zealand investors,’’ he said.
Considerations included the ‘‘ease of trading’’ on the New Zealand market and the ability of Kiwi investors to transact in New Zealand dollars.
F&P Healthcare had built a ‘‘strong and loyal base of investors’’ in New Zealand and Australia which had grown globally, Driller said.
It had not received any complaints from foreign investors that shares were hard to buy, he said.
‘‘We need a strong local stockmarket and surrounding finance industry,’’ he added.
F&P Healthcare has a sharemarket value of $7.4 billion, versus Xero’s $4.3b.
Almost half of the shares in the company are New Zealand-owned, versus about 30 per cent in the case of Xero.
Xero chief executive Rod Drury said on Thursday that a centralised listing in Australia would encourage ‘‘a different level’’ of analysts to track the firm.
Driller said New Zealand brokers had invested a lot in providing coverage by their analysts of F&P Healthcare and had been loyal in helping the company grow – helping it get its message out to the rest of the world.
‘‘We get coverage from two Australian analysts but the majority of our coverage is from New Zealand analysts so global funds are reading that research by these New Zealand analysts and that has been very valuable … I think the analysts we have in New Zealand are really world class.’’
Xero’s decision to axe its NZX listing could potentially hasten its inclusion into the S&P/ASX 200 index, as there is an entrance requirement for a set proportion of shares to change hands on the exchange to ensure sufficient liquidity for investors.
The fact that F&P Healthcare’s trading is split between the NZX and ASX – as Xero’s is now – meant it didn’t qualify for inclusion in the ASX 200 until 2015 despite it meeting the size criteria for the index.
Driller said inclusion in the ASX 200 had the advantage for existing shareholders that some Australian passive investment funds then had to consider buying the shares in the company, which provided a one-off gain.
Gaining sufficient liquidity for inclusion in the ASX 200 was ‘‘just a matter of time’’ for F&P Health care, he said.
‘‘We spent a lot of time to build up that liquidity, meeting with different investors such that it was a ‘nice to have’ in the end.’’
Xero’s Kiwi shareholders won’t be caught by the so-called ‘‘FIF’’ tax rules on foreign stocks which can mean larger investors have to pay tax on 5 per cent of the market value of their holdings each year, or on their capital gains.
That was because despite being listed on the ASX, Xero would still be a New Zealand company.
‘‘Our advisers, Deloitte, have confirmed that assuming that Xero remains managed and controlled in New Zealand and does not have a taxable presence in Australia, the proposal to delist on the NZX and list on the ASX should not result in any adverse New Zealand tax consequences for New Zealand shareholders,’’ Xero said in a statement.
"We need a strong local stockmarket and surrounding finance industry."
Marcus Driller, F&P Healthcare