Auckland-based Aroa Biosurgery got off to a flying start when it listed on the Australian stock exchange, the ASX, earlier this month.

Aroa Biosurgery was one of the largest public offerings in Australia this year, raising A$45 million at a valuation of A$225 million.

The share price climbed 80 per cent on listing day.

In January, Happy Valley Nutrition, which is building an infant formula processing plant in Ōtorohanga, also listed on the ASX. Laybuy, a "buy now, pay later" software business is due to list in the coming weeks.


All three chose to list on the other side of the Tasman, not on New Zealand's own exchange, the NZX.

Max Cunningham, executive general manager of listings and issuer services at the ASX, says one of the attractions for New Zealand businesses wanting to fund expansion is that the ASX offers a lower cost of capital.

"One of the key things people often overlook about share prices, particularly multiples, is the underlying liquidity," he says.

"If you've got more investors looking at you and trading your shares, it will help your multiples over the longer term."

Cunningham offers an example of how powerful liquidity can be in practice.

He says one of the world's biggest fund managers was in the ASX boardroom for a meeting on the day New Zealand's Xero announced it was consolidating on the bourse.

The fund manager told Cunningham the firm was a Xero shareholder. It had a global buy on Xero shares, a New Zealand mandate and an Australian mandate. It already had the maximum amount of Xero it could buy under those mandates. But it has another global mandate which can only buy shares traded on globally recognised exchanges and from companies who are part of a global benchmark index. The ASX fits the bill on the first requirement and the S&P ASX 200 meets the second.

Cunningham says when Xero consolidated on the ASX and went into the ASX 200, it freed up other funds from the investor.


Cunningham has been behind the ASX's push into New Zealand since he joined the exchange in 2013 from Goldman Sachs. "In 2014 we decided New Zealand was a great target market," he says. "At the time there were 17 Kiwi companies listed on the ASX.

"Two of these companies had dual listings. We did capital raising with Fletcher Building. We did a capital raising with the Kiwi Income Property Trust (since delisted). What I found when we were selling those transactions is that the majority of Australian fund managers needed the ASX listing in their mandate before they could follow up."

The ASX saw an opportunity to access that broader investment pool. "We started a concerted campaign. Within a year of that strategy starting we launched a new listing category for New Zealand companies. It is called Kiwi Foreign Exempt.

"What that means is that if you are listed on the NZX, you can automatically list on the ASX and we'll defer to the NZX rules.

"We've got a main listing book. And then we've got a foreign exempt listing book, which applies if you're listed in Toronto, New York or London, you've got to meet certain criteria, the biggest of which is $2 billion in market cap. And then we have a third rule book: Kiwi Foreign Exempt", he says.

This was an inflection point. Today there are 56 New Zealand-based companies listed on the ASX.


Cunningham says the ASX is more optimistic about the future with New Zealand companies than it was five or six years ago when it started on the current path. "That's why we set up a New Zealand office."

New Zealander Blair Harrison runs the ASX New Zealand office in Auckland. He had already been an ASX employee for the past six years before moving home last year. Harrison previously headed the ASX's derivatives and over-the-counter markets team.

The idea is to have a permanent presence on the ground in New Zealand. Harrison will support existing ASX customers and help develop new business leads. He says it has been busy, despite the Covid-19 pandemic and lockdown taking place during his first year here.

Says Harrison: "We have a pretty strong pipeline. We had a pipeline of companies who were looking to list in the first half of this year. They paused, because of Covid. Now that business pipeline has re-engaged, and we are looking forward to companies coming on throughout the rest of this calendar year. Happy Valley Nutrition actually listed at the start of the year. It raised capital to build a milk processing plant."

Aroa Biosurgery was the first New Zealand company to list on the ASX after the Covid pause delayed matters by a couple of months. Laybuy was set to list by June but has pushed it back to September.

"It's been a very interesting period from a couple of different angles. One is the way that the markets, the investors and the companies themselves have adapted ready to the new norm. If you look at the IPOs that we have coming up, yes, they will pause. But the fact that the borders remain closed has not precluded them from continuing with their IPOs," says Harrison.

Blair Harrison
Blair Harrison

"In some respects, it has accelerated the way that we interact. One of the companies I was speaking to said they felt that holding some of these investor meetings and roadshow meetings over video conference had focused the attention better on what they were wanting to talk to, without having to travel large distances physically."

New Zealanders have always been on top of this. Thanks to the constraints on physical travel Kiwis know how to run global companies from this corner of the world.

Harrison says another aspect of the pandemic is that it has triggered a renewed emphasis on certain types of industries and technologies where NZ excels such as life sciences, e-education and technology.

This is attractive from an Australian investor point of view. New Zealand also restores some diversity to the ASX.

As for Cunningham, he says the for the ASX the driver of New Zealand and that tech strategy is all about diversity.

"We are heavy in resources and financials. Combined, they make up 50 per cent of our market cap. Tech makes up 20 per cent of the US market cap. That's what we'd like to see in Australia.


"Our New Zealand strategy is two pronged. It's about giving Kiwi companies access to the broader capital market, but there is a very strong emphasis on New Zealand tech."

Harrison says the Australian view of NZ tech uses a broad definition of technology. "We're not talking just about software companies. It stretches across biotech, medtech and agritech."

All of these provide balance to the ASX. Cunningham looks back to when he joined the ASX and looked across the Tasman to the opportunities in New Zealand. At that time Australia was going through the biggest mining recession it had seen for 30 years. Meanwhile, New Zealand had reopened its IPO market with government privatisations.

This was six months ahead of the Australian market. He saw that companies were doing well in New Zealand when Australia was still dragged down by its mining recession.

"We had Australians buying into that diversity, being out of sync was very attractive for investors."