17 Feb 2017

Investment banker calls for urgent review of capital markets

2:39 pm on 17 February 2017

An investment banker is calling for an urgent review of the country's capital markets to halt a growing trend of local companies listing overseas rather than the New Zealand stock exchange.

NZX in Auckland.

Photo: 123RF

The topic has been highlighted by a report from law firm Chapman Tripp - only three companies listed on the NZX main board last year - with companies opting to sell privately, raise money by crowd-funding, or list in another country.

And more companies have been leaving because of takeovers, such as Hellaby Holdings, or failures and insolvencies, including Pumpkin Patch and Wynyard Group. The result has been a shrinking number of companies on the stock exchange.

The managing director of MSL Capital Markets, Andrew McDouall, said a new task-force was needed to look at failures from the last review nearly a decade ago.

"I'm aware of probably 10 to 15 companies listed on the NZX that are really questioning why - and in my opinion likely to look at shifting offshore," he said.

Mr McDouall said there were some reasons for companies looking overseas, including a lack of support from the broking community that would not do research into smaller companies.

"I would suggest that probably only about half of our companies on the New Zealand stock exchange have any published research on them which makes it difficult for the market as a whole to support them," he said.

The previous taskforce, led by investment banker Rob Cameron, was aimed at giving financial markets a shot in the arm, and encouraging companies and private investors to participate.

It made a number of recommendations to the government in 2009, including improved governance and ongoing disclosure of managed funds, as well as simplifying disclosure so investors know clearly what they were investing in.

Andrew McDouall said that taskforce was set up by government and a new one is so urgently needed that it should have started "yesterday".

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