Exchange for SMEs to open this month
WELLINGTON: A new stock exchange is to be launched targeting small to mediumsized companies that want to raise up to $20 million a year from the public.
Called Catalist, the exchange has been licensed to open a public market from June 21 for businesses too small to list on the NZX.
Catalist chief executive Colin Magee said it had been working on the licence with the Ministry of Business, Innovation and Employment and the Financial Markets Authority over the past two years.
‘‘SMEs make up a majority of New Zealand businesses, so there’s a real need for those with growth potential to have better access to capital, and equally for investors to have better access to SME investments, to increase economic growth and job creation.’’
He said Catalist’s public market meant smaller businesses would be able to access public investment with significantly lessened costs and administrative burdens and without compromising investor protections.
‘‘We’re already working through the listing process with a number of businesses — and investors can sign up for an account on our website, so they can trade when there’s an auction running.’’
The New Zealand Stock Exchange has previously tried to run a trading market for SMEs and high growth companies but ended up pulling the pin on it after it failed to attract enough new listings.
Mr Magee said Catalist would differ from the NZX by using regular auctions rather than continuous trading.
This would allow for fairer pricing and increased liquidity for financial products that did not trade very often, he said.
Businesses would only be required to disclose information for each auction rather than on a continuous basis like on the NZX.
Mr Magee said traditional stock markets did not work for SMEs because of the costs and time spent on compliance.
‘‘In the past, we’ve seen growth markets, such as NZX’s ‘NXT’, take a traditional continuous trading approach and fail to meet the needs of SMEs.
‘‘We’ve taken the learning from that and use periodic trading and disclosure instead, which has proved successful in other jurisdictions.’’
Catalist would be designed as a stepping stone market where once businesses had reached a certain size they would be helped to move on to a traditional stock exchange.
Commerce and Consumer Affairs Minister David Clark said Catalist Markets would provide a simpler and more affordable ‘‘stepping stone’’ for SMEs to raise capital. —