Tamsyn Parker

Money Editor for NZ Herald

Stock Takes: Busy year ahead for NZX listings?

The prospect of Infratil floating off Z Energy is considered highly speculative. Photo / Dean Purcell
The prospect of Infratil floating off Z Energy is considered highly speculative. Photo / Dean Purcell

BUSY YEAR

If talk from the investment bankers is anything to go by, this year is shaping up to be a very busy one for new sharemarket listings.

Outside of the well-publicised state-owned power companies it appears there could be a raft of new investment offerings, particularly in the second half of the year.

A back-door listing of the Mad Butcher is already on the cards for March. Such a popular brand would expect to sell well to mum and dad investors but it will be interesting to see if many institutional investors buy in.

Some fund managers have already expressed concern about the company's lack of growth in recent years and are wondering about the reasons behind its current owners wanting to sell out.

Also expected in the first half of the year is tech company Arria which has connections to Brian Henry - a former chief executive and director of Diligent Board Member Services.

The success of Diligent and Xero - last year's two top performing stocks - has spurred a lot of interest in technology stocks and some predict Wynyard Group could also be listed later in the year.

The intelligence gathering software company recently split off from Jade Corporation and has already said it is considering options to raise new capital. Listing would be one way to raise new money.

Auckland IT company Orion Health, which was touted as a listing back in 2007 before the markets collapsed, could also be on the cards for a mid-year listing. Telecommunications company 2Degrees has also been talked about but some say the margins on the business are too small for it to be attractive given it is targeted at the cheap end of town for mobile phone use.

SPLITTING UP

As well as new floats there has also been a lot of chatter about existing listed companies splitting off divisions into separately listed vehicles.

Perhaps the most speculative would be Infratil floating off Z Energy which it owns together with the New Zealand Superannuation Fund.

A more likely prospect is that of Kiwi Income Property Trust splitting its retail and office investments into two separate vehicles. Kiwi's major retail properties include Auckland's Sylvia Park shopping centre and LynnMall, where it has just revealed plans for a $50 million expansion project.

Its office investments include prime office block the Vero Centre in Auckland and Wellington's Majestic Centre.

Craigs Investment Partners' Mark Lister said splitting the property trust was a double-edged sword as there were benefits in having a pure play in one sector but also the downside of less diversification. Splitting in two could also be bad news for investors who may have to pay two sets of fees.

Shares in Kiwi Income Property closed on $1.125 yesterday.

Retail giant Westfield has also been talked about as possibly listing its New Zealand assets but some have said the company would have little incentive given it makes good money from the investments. More likely is the ongoing sell-down of its second-tier properties. It has already sold Downtown, Shore City and Pakuranga and has been keen to sell Glenfield Mall for a number of years. It's finding potential buyers which can be a challenge.

POLAR OPPOSITES

There are strong polarising views around Fletcher Building's position at the moment. Some, including Tower's Stephen Bennie, believe it is overvalued for a company which is highly cyclical while others say its price just reflects its potential to gain strong earnings from the Christchurch rebuild.

Fletcher's shares have rocketed up since July last year when they were trading at $5.77. On Wednesday they were on $9.34. The stock is trading at 34 times earnings, which does seem high compared to the historical average of the NZX50 which sits around 14 times earnings. While Christchurch may be a big positive Fletcher faces challenges from the Australian building market where consents are at a very low level.

Fletcher shares closed down 15c at $9.19 yesterday.

BREAKING UP HARD TO DO

After more than two years on the block it looks like there will be some major progress soon on the break-up of insurance group Tower. Its health insurance arm was flicked off at the end of last year and now it seems New Zealand-owned rival Fidelity Life may pick up the life insurance part of the business.

Fidelity has made no secret of its desire to pick up the business - an ironic situation given Tower made an unsuccessful bid to acquire Fidelity a few years ago.

Stock Takes believes the sale could be finalised as soon as next month ahead of Tower's March annual general meeting. Tower's investment business - which includes its KiwiSaver portfolios - has also been widely talked about. Around the market expectations are that the BNZ is the natural buyer given it has only just got around to launching its own KiwiSaver scheme.

But it seems the BNZ may not want to pay the price Tower is asking. Perhaps the sale of the life insurance business would allow Tower to be more flexible about how much it wants. Tower closed up 2c at $1.94 yesterday.

SALE TALK

Tower's investment business is not the only fund management company being talked about around the market. There has also been speculation around stakes in Brian Gaynor's Milford Asset Management and Carmel Fisher's Fisher Funds being up for sale.

Milford has won some significant mandates in recent years, including investing a portion of the Super Fund's money, and now has some real scale. But Stock Takes understands there are no plans to sell any part of the business and organic growth is the main target of the company.

Fisher Funds has also built up its business in recent years through acquisition of a number of other KiwiSaver businesses including Huljich Wealth Management.

Some say the reasons for building it up could include plans to sell it to another provider. Speculation has centred around TSB Bank buying in. Fisher Funds managing director Carmel Fisher did not return calls yesterday.

- NZ Herald

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