NZX dismisses activist shareholder’s demands

NZX Ltd has dismissed a set of demands from an activist investor, which included three board positions and a proposed change in strategy.

Yesterday the stock exchange operator released demands it says it received from Elevation Capital, an Auckland fund management business that has been running an unusually public campaign for change for a week, demanding cost cuts and the demerger of its fund management business.

Although it said it considered the demands, NZX described the call for director positions as ‘‘outlandish’’ and the overall demands as ‘‘unreasonable’’.

Elevation demanded that its managing director, Christopher Swasbrook, and another director, Craig Stobo, be appointed to the NZX board, and that they be joined by Michael Daniel, a former stockbroker who says he owns 1.5 million NZX shares.

Although Elevation has said repeatedly that it does not want NZX to be sold, Daniel told Stuff on Friday that he had lobbied for a merger of NZX and Sydneyheadquartered ASX.

Elevation also demanded that NZX appoint John Fernandes, who previously worked at NZX ‘‘to drive the implementation and management’’ of a new strategy.

Directors of NZX would be required to pay back the cost of a trip to New York in September.

In response, NZX described the director demands as ‘‘an outlandish position for a shareholder with approximately 2.3 per cent of the company, and would ride roughshod over the interests of other shareholders’’.

NZX said Elevation’s strategy ‘‘largely borrows from NZX’S already published strategy ... [and] NZX does not believe the areas of difference would create additional value for shareholders.’’

The company said it did not believe Fernandes ‘‘would add value’’ and defended the value of the New York trip, where it signed a memorandum of understanding with the Nasdaq.

Under company law, shareholders representing 5 per cent of the company can call a special meeting and put forward demands.

Elevation, which claims to control 2.3 per cent of NZX, appears to have enough support to call a meeting. Another shareholder controlling 2.18 per cent, David Odlin, has indicated he would support such a move.

Daniel said he owned 1.5 million shares, while a former business partner owned 2 million shares, and he would be supporting a special meeting ‘‘with my boots on’’.

Daniel revealed that in the past two years he had been trying to get the ASX and NZX boards to talk to each other, which included meeting management at ASX.

‘‘They are really, really interested in a merger [but] there’s no way they would be an aggressive bidder – they would need to have an approach from NZX,’’ he said.