NZX under fire on strategy and pay
A high-profile KiwiSaver provider has backed calls for a shake-up at the NZX, saying its energy was focused on competing with its customers.
Activist investor Christopher Swasbrook, managing director of Elevation Capital, yesterday launched an attack on the stock exchange operator, urging it to cut staff numbers and sell non-core businesses.
Elevation Capital is calling for the NZX to ‘‘implement a revised strategic plan, with clear financial metrics, a spin-off of the fund services business, strategic joint ventures, further reductions in headcount and an elimination of wasteful spending’’.
The fund manager said it held about 6.2 million NZX Ltd shares on behalf of clients, equivalent to about 2.3 per cent of the company.
Yesterday it claimed shareholders in the company had foregone $235 million in total returns compared with the NZX 50 index between 2012 and 2017, a period when equity markets in general have surged.
‘‘NZX’s current strategic plan presented in November 2017 is not strategic, nor a plan,’’ Swasbrook said in a statement.
‘‘If I handed the current document to someone to go and execute, they would know neither (i) what to do, nor (ii) what results it was meant to achieve.
‘‘In essence it is a political document, written so the board and management can maintain good graces with the stakeholders that they are looking to cultivate. In this, the NZX of today has become the NZ Post of old. Looking for political solutions to business problems, instead of looking for real business change.’’
Sam Stubbs, who heads non-profit KiwiSaver provider Simplicity, backed the calls.
‘‘The problem the NZX has is at its core is that it’s focused its corporate energy on running a funds management business, and in the process is competing with its clients, including every KiwiSaver manager,’’ Stubbs said.
‘‘At the time when the NZX is supposed to be running the best marketplace for capital, what it is actually doing is setting up a stall in the marketplace to compete with its clients.
‘‘And it seems to be paying its staff very well to manage the stall.’’
In a statement, NZX said it always welcomed investor feedback and Swasbrook raised ‘‘several good points’’.
‘‘The team at NZX is working hard to build a collaborative New Zealand capital market and is focused on providing more value for all its shareholders,’’ it added.
NZX said it was ‘‘divesting our noncore assets, improving our customer service and business efficiency, increasing liquidity in the secondary market, and progressing plans to simplify the New Zealand market’s structure and rule set’’.
‘‘In addition to this, we are actively assisting companies to share their progress with investors – hosting retail investor evenings, sponsoring investor roadshows, and working alongside the broader market to promote the benefits of listing, with masterclasses now regularly held across the country for prospective customers.’’
It looked forward to reporting on progress in February.