Investment bankers are putting increasing numbers of companies under the microscope as New Zealand firms line up to cash in on a rising sharemarket.
Sources say advisers are being highly selective when taking on clients as a result of high demand and because many companies that want to go public are not ready to do so for reasons such as a lack of suitable corporate governance or management.
"We just advise them that maybe they're a year early and need a little bit more work," said a source. "There's a lot on and we're incredibly busy. It's probably the busiest I've ever seen it. But with the IPOs [initial public offerings] we're committing to we're finding the resources to do it."
Another senior market source said his firm had been approached by about 14 companies in the past six months that wanted to list, but less than five had been taken on as clients.
"What we're seeing is a greater demand than the investment banking and advisory community could possibly supply."
New Zealand's IPO pipeline has been building on the back of a rapidly rising stock market. The NZX-50 index has surged by 27.5 per cent since the start of last year. NZX chief executive Tim Bennett has said as many as 40 firms were considering listing.
Software companies Gentrack and Serko will IPO this month while other tech companies including ikeGPS, Fronde, Wherescape, Orion Health, Triplejump and Eroad are on the listing radar. Scales Corporation, a Christchurch-based fruit and vegetable marketer, has been widely speculated upon as a listing candidate and a $300 million float of Hirepool is expected this year.
John Moore, managing director of Miro Capital Advisory, said advisers could afford to be discerning in the current market.
"Why would you do a $5 million deal, and tie up your network, when you can do a $20 million, $50 million or greater [IPO]?" Moore said.
He said the quality of companies coming to market was better than during the mid-1980s IPO boom. "It's not just the banks that are being selective - the market itself is being selective and the banks are responding to that," he said. "I think the fact that not every company that wants to list can list is actually a good sign for the market. If you get to the point where you can float anything you're in an IPO bubble and we're not in an IPO bubble."
More than $7 billion of new capital was listed through 10 NZX floats last year. Two NZX listings - Genesis Energy and education provider Intueri - have taken place this year.