Stock Takes: Investors on hold as Vodafone ponders NZ listing

Vodafone NZ - a unit of the giant British telco Vodafone Group - is understood to be considering an initial public offering, but the company has so far not commented. Photo / Brett Phibbs

The possible addition of Vodafone New Zealand to the NZX is seen by investors as a definite plus for the local market which, despite another stellar year, has been starved of new listings.

This year has only seen the NZX debut of retirement village company Oceania.

That's a far cry from last year, which saw Tegel Group Holdings, NZ Herald-owner NZME, Investore Property, New Zealand King Salmon and Tilt Renewables hit the main board.

Vodafone NZ - a unit of the giant British telco Vodafone Group - is understood to be considering an initial public offering (IPO), but the company has so far not commented.

While it is still largely in the "sounding out" stage, it appears that the failure of the deal to merge with Sky Network TV has clearly been a blow for both businesses, and that the issue now on the drawing board represents plan B.

Salt Funds managing director Matt Goodson says Vodafone NZ would be welcomed by the investment community in no uncertain terms.

"Absolutely it would be welcomed," he says. "It would be of a decent size."

It's been slim pickings on the IPO front this year, despite it being another very strong year for equities.

Craigs Investment Partners head of private wealth research Mark Lister says new issues have been few and far between.

"It's been a really slow year, given the fact that the market has been so incredibly strong," Lister says.

"The sharemarket is up 13.6 per cent, so we are heading for one of the best years that we have seen for quite a long time," he says.

"You would think that this is an environment that it is much more conducive to more companies looking to raise capital and to list on the NZX, but we just haven't seen it."

Everyone in the investment community would like to see more companies coming to market, Lister says.

"Certainly there is no shortage of capital out there wanting to find a home."

The Growth Question
Salt Funds' Goodson says the question for Vodafone NZ, and for many of the already-listed entities, is where does the future growth come from?

"That's obviously not stopped a number of others trading on the back of their dividend payouts, as opposed to their strong growth prospects," Goodson says.

"The thing that distinguishes Vodafone from Spark is that it does not have the legacy fixed line business, and it is obviously very strong in mobile telephony and data," he says.

"The size of those divisions and the outlooks for them will be a key part of the process as we await more information."

Jacinda effect?
The share prices of all the major listed retirement village companies have tailed off in recent weeks.

Since late August, market leader Ryman has fallen by 38c from $9.48.

The real estate market has a direct impact on how these companies fare, so weakening house prices may be making their presence felt. It's also possible that they could be reacting to the Labour Party's improved - albeit brief - showing in the opinion polls, thanks to Jacinda Ardern's elevation to the top job.

Shane Solly, portfolio manager and research analyst at Harbour Asset Management, says retirement village operator Arvida's plan to raise $77 million in a discounted rights issue to help pay for three new villages could be acting to divert interest from the others, hence the weakness in their share prices.

In the big picture, Solly says the outlook for the sector remained favourable.

"The structural trend, the demographic of a massive wave of baby boomers hitting their mid seventies, will happen regardless of policy change or a slowdown in the residential property market."

FPH and the MSCI
Talk of the possible inclusion of Fisher & Paykel Healthcare on Morgan Stanley Capital International (MSCI) indices has driven the share price of the respiratory products manufacturer higher.

Morgan Stanley compiles the indices, which are widely tracked by fund managers worldwide.

Only a handful of NZ equities are covered and speculation about inclusion of certain stocks surfaces from time to time. It is understood an index review will be released in November.