It's billed as the place to trade shares in small, high growth businesses, but growth is something the new NXT market hasn't seen much of.
NZX head of markets Mark Peterson admits it's been a hard road getting the NXT exchange up and running.
The new board -- aimed at firms valued at $10 million to $100 million -- launched in June with the listing of G3 Group, a business mail and document management business.
At the unveiling of NXT's branding in August last year, the sharemarket operator said a number of firms were considering raising capital by listing on the new market. The prospects included technology developers Straker Translations, Fronde and Booktrack, as well as Invivo Wines.
But since G3, a compliance listing which didn't raise any cash, there have been no NXT floats.
That has been prompting questions from the business media about why the uptake has been so slow.
"We feel like we're a bit of a dartboard at the moment, from the journalists," Peterson said at the Infinz finance industry conference in Auckland last week. "It is hard to get going with a market like this -- the environment has got to be right and companies have got to want to do it. I guess we'll measure the success of [NXT] over the next five years." But he said there was a solid listing pipeline for NXT, which has its own disclosure regime aimed at keeping a lid on costs for smaller companies.
There's nothing fundamentally wrong with the NXT market -- the fact that things haven't happened is more symptomatic of the rest of the market.
"We've had lots of enquiries for next year," Peterson said. "There have been a couple [of companies] that were intending to go before Christmas that are now probably looking to be next year."
The NXT market is the second attempt at providing a specialised marketplace for smaller companies. The first -- the NZAX -- was launched in 2003 and has attracted 22 companies, but is expected to be phased out in favour of the NXT.
Digital advertising company Snakk Media is expected to move from the NZAX to NXT on November 5th. Meanwhile, Cooks Global Foods, the Esquires coffee chain franchisor, has signalled its intention to move from the NZAX to NXT.
Cooks executive chairman Keith Jackson said in January that the new market could provide a "stepping stone" to an eventual NZX main board listing.
Peterson said the five advisory firms signed up to advise potential NXT issuers were busy.
"They're telling us that they're active -- they've got lots of opportunities out there with lots of enquiries coming their way," he said. "We'd like to think that over the next two to three years we'll end up with a pretty active market. But it is going to take some time and clearly there are wider elements in play and market conditions are one, and the readiness of companies as well."
John Moore, managing director of Miro Capital Advisory, an NXT adviser, said he wasn't disappointed by the new market's slow uptake.
"Frankly, there hasn't been too many [capital] raisings this year, of any size," he said. "There's nothing fundamentally wrong with the NXT market -- the fact that things haven't happened is more symptomatic of the rest of the market." So far this year, there have been just two initial public offerings on the NZX main board -- transport and logistics firm Fliway Group and insurer CBL Corporation.
That's a big change from last year, when there were 16 NZX and NZAX listings, including 12 main board IPOs.
Whenever you have that sort of advice going round, it's pretty hard to get anyone interested in something new, at all, regardless of what it does. And it's even harder to get them interested in something new that's high growth and therefore likely to be higher risk.
Moore said many sharebrokers had been advising clients to avoid risky investments this year, which was not a great environment for attracting listings to a new, higher risk market like NXT.
"Whenever you have that sort of advice going round, it's pretty hard to get anyone interested in something new, at all, regardless of what it does. And it's even harder to get them interested in something new that's high growth and therefore likely to be higher risk." After several years of strong returns, markets have become more volatile in recent months, thanks to fears about China and the global economy, and uncertainty about US interest rates.
Moore, whose firm is advising Snakk Media and Cooks, said he was talking with a number of other companies that were looking to list on NXT, which he couldn't name.
"I think for a small, high growth company, the NXT market is a pretty good place to be." NXT companies will provide interim and full-year reports, as well as quarterly updates that include progress towards "key operating milestones".
The NXT regime also includes "bright line tests" that help issuers identify what information must be immediately disclosed to the market.
These include a banking covenant breach, the appointment of a receiver or liquidator, and the likelihood of a company's operational performance varying by more than 10 per cent from published targets.
NXT firms will pay a $30,000 annual listing fee, which includes company research by Edison Research and "market maker" services by First NZ Capital.
The new market was made possible by the Financial Markets Conduct Act, a once-in-a-generation overhaul of securities legislation that came fully into force in December.