An "NZ Inc" solution to providing the All Blacks with essential capital is finding favour with the NZX and potential investors alike.
"The All Blacks are unique. They're one of the world's biggest brands and certainly one of the biggest brands in sport, and incredibly important to New Zealand," says NZX chief executive Mark Peterson.
"From an investor perspective, I think it would see a lot of interest."
The "NZ Inc" alternative to New Zealand Rugby's proposal to sell 12.5 per cent of a new commercial business to private equity giant Silver Lake for $387.5 million has come late in the piece. New Zealand rugby was hammered by Covid-19. Silver Lake began its discussions with NZ Rugby even before Finance Minister Grant Robertson announced financial assistance to New Zealand's prime sporting codes in mid-May 2020.
Forsyth Barr has instead proposed a partial flotation of NZ Rugby's commercial business on the NZX. "The feedback from our clients, from other NZX firms, from overseas, from people in the rugby community, are all saying 'fantastic, what can we do to help, we'd love to see this happen'," Forsyth Barr's managing director Neil Paviour-Smith told the Herald.
The Forsyth Barr proposal — mandated by the NZ Rugby Players Association — would see $170 million -$190m raised by a special purpose company which would own 5 per cent of NZ Rugby's commercial business.
Peterson contends the Forsyth Barr team would have made pretty sure there was strong investor interest before going public. "It would be a really interesting thing just to line the two proposals up side by side. Look at the 'pros and cons' of each, because you know that New Zealand is really, probably going to support an investment proposition around that.
"So, from a market point of view, we've been enthusiastic, very enthusiastic,
"It's a bit innovative. But for something with a brand as strong as the All Blacks, I think that would go well."
Having a strong brand — and strong investor support — was also critical when it came to stressed New Zealand companies seeking more capital in the wake of the Covid-19 pandemic shock which impacted heavily on many businesses.
Says Peterson: "As we saw in the first half of 2020, when businesses had performed well, they had good, strong and trusted relationships with their shareholders.
"When they needed support, the support came."
Peterson says the NZX has now made it simpler for companies to list by the direct listing road.
"That is a very efficient mechanism for raising capital. Of the nine companies that came to market last year, and the three that have come this year, that's been a reasonably popular avenue."
Peterson acknowledges the market response to the Covid-19 pandemic has played a massive role in lifting liquidity on the NZ exchange. But he underscores there were quite positive signs back in 2019 that the NZX was starting to get more momentum.
"We never thought it would come at us as fast as it did, but certainly we felt like we were on the right track. And actually, in the second half of last year and then when you look at the stats rolling into this year, you know, we're averaging over $220 million a day. You don't need to look too far in the rearview mirror to see $120 million a day."
200 wealthy investors
Peterson supports the Labour Government's intention to open the door to some 200 wealthy foreign investors to come to New Zealand and kick the tyres on potential investments. "They could be a very valuable piece of the puzzle," he says.
"We've got to get these businesses up and strong and generally you do that in a private capacity first.
"And if those folk can come in with the resources to assist with that and to open up connections, that's just going to be a good thing."
Peterson says New Zealand just needs to make sure that all the rewards don't float offshore and some of the rewards are captured at home.