The mood was upbeat at NZX's Auckland offices yesterday as the third addition to the new NXT board, food supplements maker Oceania Natural, went public.

The sharemarket operator will be pleased to get another issuer over the line as there has been much market chatter about the seemingly tepid uptake of NXT, which is targeted at fast-growing small and medium-sized firms and launched in mid-2015 with the listing of business mail operator G3 Group.

But a trend appears to be emerging that should worry anyone who cares about deepening this country's capital markets.

In recent weeks two New Zealand tech firms, Volpara Health Technologies and 9 Spokes, have announced plans to skip the NZX and list on Australia's ASX.


That follows Christchurch-based jetpack maker Martin Aircraft Company's decision to list across the Tasman last year.

They aren't huge deals.

Wellington-based Volpara, which develops software for analysing mammograms, is looking to raise just A$10 million ($11 million), while software platform aggregator 9 Spokes wants to raise up to A$25 million.

However, missing out on a couple of floats amid a deathly quiet IPO market (Tegel Foods is the only big deal coming up in the near term) is a blow for NZX.

The ASX is a vastly bigger and more sophisticated market, offering issuers access to deep pools of institutional and retail investor capital.

Media comments from Volpara management this week suggest this was a key driver in the company's decision to list in Australia.

Dual NZX/ASX listings have been popular with New Zealand firms of late, but it seems Volpara viewed listing on both sides of the Tasman as more trouble than it was worth.

What to do?

Much has already been done to try to make listing and capital raising easier in New Zealand for the likes of Volpara and 9 Spokes. NXT, with its looser disclosure regime than the main board, is a case in point.

But a headwind facing early-stage companies looking to IPO in New Zealand is the fact that many recent floats in that space have performed poorly post-listing, making local investors wary about sinking cash into such firms. At market open yesterday, shares in Orion Health, Serko, IkeGPS and Eroad were all below their 2014 listing prices. And Gentrack shares were only 7c above the $2.40 they listed at in June 2014.

An NZX spokeswoman said discussions with bankers and other advisers suggested appetite among Kiwi retail and institutional investors for early-stage, cashflow-negative businesses was limited at present.

"New Zealand companies now have a broad range of capital raising options ranging from private equity to equity crowd funding to listing on NZX ... and NXT, or listing or capital raising offshore," she said. "However, what drives a successful capital raising ... is investors' willingness to invest, or investor appetite."

India the best bet

Two-thirds of India's 1.2 billion people are aged 35 or under. Photo / AP
Two-thirds of India's 1.2 billion people are aged 35 or under. Photo / AP

Craigs Investment Partners reckons it's too soon to jump back on the emerging markets bandwagon, with capital outflow and currency challenges facing developing economies yet to fully run their course. But for long-term investors willing to endure some short-term pain, Indian stocks are looking a reasonably good bet.

That's according to the brokerage's latest monthly report to private wealth clients, which lays out its investment case for the subcontinent.

Craigs notes the country's demographic advantages (65 per cent of its 1.2 billion people are aged 35 or under), as well as the potential for India to embark on the kind of investment drive its developing-world peers are currently pulling back on.

"While the investment boom in many other emerging markets is just starting to unwind, India has actually suffered from a chronic lack of investment in infrastructure and productive assets," the report says.