Delisting shock ends bull run

Xero will always call New Zealand home despite its decision to quit the New Zealand stock exchange, chief executive Rod Drury says.

The company announced it would delist from the NZX and ‘‘consolidate’’ its share trading on the ASX in Australia, where its shares are also listed, as it released its interim results yesterday.

But Drury said Xero would remain headquartered in Wellington and domiciled in New Zealand.

‘‘We remain a New Zealand company. New Zealand will always be our home,’’ he told analysts on a conference call.

‘‘We have over 1000 people here. We are investing putting offices in the provinces. None of that changes at all.’’

But Drury said Xero was getting ‘‘inbound interest from investors all over the world’’ keen on buying shares in the firm, and centralising its listing in Australia would make it ‘‘much easier to get those investors on to the register’’.

Xero shares fell 4.3 per cent to $32.60 within minutes when trading opened on the NZX yesterday morning, while shares in the NZX – which is listed on its own market – fell 3.3 per cent to $1.16.

Drury said Kiwi shareholders would not need to take any action as their holdings would automatically be transferred to the ASX.

New Zealand sharebrokers charge similar fees for buying and selling on the NZX and ASX. ASB Securities, for example, charges a commission of 0.3 per cent on both markets, with a NZ$30 or A$30 (NZ$33) minimum trading fee.

"We remain a New Zealand company. New Zealand will always be our home." Xero chief executive Rod Drury

But investors can expect to lose up to about 2 per cent in the currency conversion transferring the proceeds of share sales back into New Zealand dollars through the major banks.

Trading in Xero shares will cease on January 31 and it will delist from the NZX on February 2.

That will be a blow to the exchange, which has benefited from Xero’s business and from a flow of new tech listings that followed Xero onto the public market after its sharemarket success.

Xero is the sixth-most valuable Kiwi company on the NZX, having had a market worth of more than $4.7 billion before the announcement. It accounts for about 3.6 per cent of the total market value of the NZX’s main board.

NZX spokeswoman Hannah Lynch said it was ‘‘naturally disappointed that Xero has decided to leave the local market’’, but was pleased to have played a pivotal role in its success.

Ironically, the decision to delist comes after a bull run in Xero shares, which had risen in value by about 50 per cent in the six months before the announcement.

Xero said it had enough cash to see it through until it started generating profits, without drawing down on its debt facility.