KEY POINTS:
Private equity players bringing businesses back to the market or selling them to listed trade buyers could be the best hope for new listings this year in what is expected to be another tough year for the New Zealand stock exchange.
Last year just two companies listed. Troubled
consumer finance company Geneva Finance listed in July, as part of a capital restructure programme, and Cooks Food Group, an amalgamation of three food companies, listed in October.
Tyndall Investment Management fund manager Rickey Ward said businesses were always looking for ways to raise money to either expand or acquire others businesses and listing on the stock exchange was one way to do
this.
But he said the issue was that business owners generally had a higher perception of what their businesses were worth than the market.
He believed the highest potential for new listings or initial public offers rested in the hands of private equity players.
Ward said the tightening of the credit markets meant many private equity companies would go back to their investors for more money.
Banks were also increasingly tight with their lending to corporates.
He believed private equity players struggling for cash could look to sell to trade buyers which could be listed companies with the money to buy up businesses.
That could mean existing listed companies come back to the market to raise money to make the acquisitions.
"We might not get any IPOs, it might be existing listed companies looking to raise cash. I think it will come from corporates buying corporates or companies coming back to the market."
Mike Taylor, a fund manager who previously helped fund private equity firms through a role with the Royal Bank of Scotland, said he expected there would be a lot of talking going on between private equity firms and their banks at the moment.
"If they want to sell a business there won't be another private equity player who wants to buy it. And it won't be the equity market they look to. The only likely buyer is a trade buyer."
He believed it would be very tough for any firm to raise money in the equity market at the moment.
"Their advisers will be telling them to sit back and wait. Really, 2009 is going to be a bit of a write-off."
But ABN AMRO Craigs head of equity capital markets Mark Somerville-Ryan said he believed any new listings would depend on how well the market went.
"If the market recovers through the first half of the year you could see some come to market through the middle and end of year."
Somerville-Ryan said it was difficult to know whether private equity players would sell their businesses.
"It's quite difficult to say, when you have a seller that needs to sell it's not such a good negotiating position with the market. You can get more value through selling through trade players."
