The immediate post-listing performance of these companies has been mixed. Three of the stocks commenced trading at a discount to the offer price (Serko, IKE, Scales) and three of the 12 at a premium greater than 10 per cent to the offer price (Genesis, Intueri, EROAD).
The remainder opened at, or at a small premium to, the offer price.
Despite the large number of listings in the technology sector, $736 million of the total $1.8 billion issued was from Genesis Energy, the final company to be floated under the Government's mixed ownership model plan. A year on from listing, Genesis Energy is trading at 23 per cent above its IPO price.
Vista (trading 121 per cent above listing price) and EROAD (trading 35 per cent above) have been the strongest performers of the class of 2014.
Both companies sought capital to fund growth strategies. Vista raised $40 million to fund its overseas acquisition and product development strategy. EROAD raised $46 million to fund its North American growth strategy.
The $25 million IPO of transport company Fliway was completed on April 9, the only company to list on the NZX Main Board so far this year.
In addition, Precinct Properties undertook a rights issue in March, raising $174 million to fund the development of property in Auckland.
NZX listings have generally been focussed towards the centre and back-half of the calendar year (since 2004, only 12 per cent of listings have taken place between January and April).
The level of placement activity has been high for a number of years ($1.6 billion in 2012, $2.8 billion in 2013 and $223 million in 2014), but so far this year it has been low, Quadrant's recent placement of 8.75 per cent of Heartland Bank being the only placement of note to date.
A number of the major New Zealand institutions, however, manage money on a trans-Tasman basis, and have been participants in Australian capital market activity.
The Financial Markets Conduct Act (FMCA), which replaces the Securities Act (1978) and certain other securities legislation, changes the way capital raisings can be conducted.
In particular, the new act allows so-called "same class offers", where an existing listed equity issuer can make offers of shares to the public without the need for a formal offer document.
The issuer instead undertakes that they are in compliance with NZX continuous disclosure rules and not in possession of any non-public material information. For listed companies, this allows faster preparation of capital raisings, and reduces compliance costs.
The many benefits of the new regime include:
• Placements can now be offered to a broader range of investors. (Previously, undocumented placements could only be made to "habitual" or other certain classes of investors, which excluded smaller shareholders from participating in placements).
• Shares sold in a new issue under the FMCA are free from resale restrictions. (Under the Securities Act, shares acquired in an undocumented placement could not be acquired "with the intention of resale").
• Issuers who previously may have offered shares to institutional investors only in a placement are more likely to make a pro-rata offer of shares to all shareholders.
Precinct Properties was the first large-cap New Zealand company to make a pro-rata offer under the FMCA, and it is expected that more companies will follow this year.
NZ First Capital
First NZ Capital acted as an advisor on the IPOs of Mighty River Power, Z Energy, Genesis Energy, Scales, EROAD and Orion; the Precinct Properties capital raising; and the Quadrant placement of shares in Heartland.
A tale of rising capital markets
1: The NZX50 has posted gains in each of the past three years to April 30, 2015 and rushed ahead of the leading indexes in Australia, London, New York and Hong Kong.
2: The forward price-to-earnings of stocks on the NZX presently sits at 20.7 times multiple up 12 per cent on the first 4 months of 2014. During the same time, the forward PE for the S&P500 increased 12 per cent to 17.3 times and for the FTSE100, an increase of 15 per cent. Dividend yields have continued to fall, with a present average gross dividend yield of 6 per cent. While this is below the 10-year average, of 6.8 per cent, it compares with a 2.3 per cent yield for the ASX200.
• Martin Stearne is a Managing Director of First NZ Capital and its Head of Equity Capital Markets.
