More sharemarket departures tipped
The number of companies listed on the New Zealand sharemarket will continue to shrink this year, according to law firm Chapman Tripp.
Chapman Tripp has released a trends and insights report on New Zealand’s equity markets and is predicting more departures from the NZX and just three new companies to list — a number in line with previous years.
Rachel Dunne, a partner at the law firm, said the drop in the number of listed companies seen in 2016 was likely to continue this year with two insolvent companies expected to delist and a number of others reported to be facing tough times ahead.
“Former sharemarket darlings, Wynyard Group and Pumpkin Patch, hit black ice last year and are likely to be delisted this year.
“Further insolvencies are also on the cards with the media reporting tough trading conditions ahead for some issuers,” she said.
Last year a number of companies delisted from the NZX following takeovers.
Only three new companies joined the main board of the NZX last year — Tegel, Investore Property and New Zealand King Salmon.
Dunne said she expected a similar number of initial public offers (IPOs) this year, which was disappointing in relation both to the much stronger relative performance of the ASX in attracting new listings over 2015 and 2016 and to NZX’s success in doing the same through 2013 and 2014.
Rumoured IPOs this year included Hirepool, Oceania Healthcare, Dairy Farms NZ, the UK’s Arria NLG and Complectus.
The report also questioned whether the NZX may also have to consider ditching its junior boards, the NZAX and NXT, because of its struggles to attract new listings.
“We also wonder, in light of the difficulties the NZAX and now the NXT market have had in developing a strong pipeline of new issuers, whether the NZX will conclude that the New Zealand market is simply too small to sustain these junior boards — especially given the early success of crowdfunding, which allows companies to raise money from the public without having to list.”
However, Dunne said investing in the New Zealand sharemarket remained attractive due to the strong economy and low interest rates.