12 Sep 2013

ASX lures New Zealand companies

3:52 pm on 12 September 2013

The Australian Stock Exchange has stepped up its approaches to New Zealand companies to dual list, saying it is working on ways to cut costs and streamline the process.

Some 25 New Zealand-domiciled companies are already listed across the Tasman, including four this year, with up to three more in the pipeline by December.

ASX listings and issuer services general manager Max Cunningham says the privatisation of state assets and the Fonterra Shareholders Fund listing have drawn investors' attention to New Zealand.

He says feedback from fund managers and the broader investment community indicates there is a growing interest in and demand for quality New Zealand companies.

Mr Cunningham says the primary benefit for New Zealand companies of listing on the ASX is access to an increased investor pool.

He says the Australian funds management industry is the third largest in the world with a total of $1.7 billion, which is expected to grow to just under $2 billion by 2015.

Retirement village operator Ryman Healthcare says it may dual list in the future when it has a greater presence in Australia and it needs to build its brand and credibility with customers there.

But chief executive Gordon MacLeod says many New Zealand companies do not get the same recognition in Australia because of the way their market capitalisation is assessed.

He says if a New Zealand company with a large market capitalisation does not have a large number of Australian investors on the share register, then its relative weighting can be quite low.

Mr MacLeod says companies like pension funds invest in companies based on their relative weightings in the indexes.

He says that means a dual listing does not necessarily ensure a company will get a pick-up in investment.

"So for example, we've got a market capitalisation of $3.4 billion in New Zealand and that wouldn't necessarily translate if we were to be dual listed in Australia."

Mr MacLeod says it would be better for New Zealand companies if compliance with the New Zealand listing rules was immediately deemed to be compliance with all the Australian listing rules.

Mr Cunningham says the assessment process could be reviewed within Standard & Poors' defined framework for admitting companies to the index. But he says the ASX is looking at changes to the listing rules to make it easier for New Zealand companies.

He says there are a number of hurdles and documentary requirements to listing on the ASX and some of those will be reviewed in the future.

Mr Cunningham says once a company is listed on both exchanges there are a number of rules where some extra work may be required to meet the compliance in both markets.

"And that is an area where we actively are seeking to try and streamline and make it easier for New Zealand companies who are listed in both markets to meet their obligations without too much red tape."

Mr Cunningham says it is not cheap to produce a prospectus or an information memorandum because it involves the work of investment banks, lawyers, accountants and the exchange.

He says if the organisation can streamline the process to make it easier it will, but there is no solution in hand at this stage.