It's been slim pickings for investors seeking new opportunities on the NZX but law firm Chapman Tripp says New Zealand's equity capital markets are showing signs of revival.
The firm, in its annual edition of New Zealand Equity Capital Markets, said consolidation of NZX's boards, changes to fees and rules around on-market trading, the new NZX listing rules and recommendations from Capital Markets 2029, drove significant change to New Zealand's equity capital markets in 2018 and 2019.
Chapman Tripp corporate partner Rachel Dunne said that despite the moderate projections for markers such as initial public offer activity, a sure sign of NZX's better bill of health last year was found in the banner listing, the Napier Port IPO.
The offer received strong Australian institutional investor demand in spite of opting not to dual list on the ASX.
"This indicates a confidence in the NZX not seen in previous years," Dunne said.
The Napier Port IPO was a highlight for equity capital markets in 2019, which saw the Hawke's Bay Regional Council raise $234m by effectively selling 45 per cent of the port in order to fund the cost of a significant wharf extension.
There were just two new equity listings on the NZX last year - medicinal cannabis company Cannasouth and Napier Port.
Chapman Tripp noted a rise in popularity in alternative capital markets platforms and innovative services for smaller investors to participate in public capital markets, with Link's ShareMeUp service recently launched and MyCap's trading platform planned.
Another key observation is that New Zealand companies' attempts to engage with their investor "universe" were also improving.
"New Zealand has previously lagged in this area compared to larger and more mature markets, so this is certainly a step in the right direction.
"There are many benefits of this, from protecting companies against hostile takeovers, to reducing combative-style shareholder activism, which is on the rise, particularly offshore," Dunne said.
New Zealand Oil & Gas provided a very public example of both the power of shareholder activism and the importance of takeover response strategies.
Other predictions from Chapman Tripp included:
· Improved IPO activity though still subdued due to the low interest rate environment and a strong focus on yield.
· More take-private transactions in 2020, due to the fact that a number of listed companies are trading quite significantly below NTA per security.
· More direct listings, where a company lists on the stock exchange but doesn't raise new capital at the time of its initial listing.
· More environmental, social and governance (ESG) products brought to public markets.