Savings flow 'beginning of a journey'

Tim Bennett says the sharemarket is on the right trajectory. Photo / David White

NZX boss Tim Bennett has set himself a big goal over the next fews years - to put listing on the sharemarket back on the agenda of mid-sized private companies.

Bennett, who has been at the exchange for a year now, says the Government's Mixed Ownership Model is addressing the big end of town and there is also a good pipeline of small growth stocks coming through. "The real challenge is the middle of the market which is privately held businesses."

Bennett believes one of the reasons listing on the New Zealand sharemarket hasn't been on the agenda for mid-sized companies is that it just hasn't been an exciting place to list. "There has been a lack of interest in equity investing from New Zealanders and those who have invested have looked overseas and found better returns there."

But that is changing now funds are flowing into KiwiSaver and from there into the sharemarket, he says.

"There is money available and more interest in the market. We are suddenly seeing a lot more interest based on the success of Moa and Fonterra."

Bennett says convincing mid-sized companies to list on the exchange - whether it's an exit strategy for their owners or the chance to tap more capital for growth will require a mind-set change. "They need to see that is can not only be good for them but also contribute to the development of the capital markets.

"Those sorts of conversations involve many one on one meetings," says Bennett.

He admits it will be a tough call convincing some to change and says listing isn't right for all business owners. "It requires the current owners to think about what sort of legacy they want to leave."

But he says the goal is just to make sure listing on the sharemarket is one of the options being considered alongside a trade sale or sale to private equity buyer.

If business owners want to undertake a trade sale they typically get their money out quickly and then have nothing more to do with the business.

Listing it on the sharemarket can offer the option of growing the business and then selling down over time.

"When the time comes to retire they will have some more options."

New Zealand's sharemarket is always talked about as being a very small part of its GDP.

Bennett says Australia was the same back in the early 1990s before superannuation became compulsory and several large companies like Telstra were privatised.

He says New Zealand is at the beginning of that same journey which was kicked off in Australia by strong underlying growth in savings.

He says the New Zealand market has a long way to go.

"But we are certainly on the right trajectory. What we need now is more products on the shelf and plans there are a work in progress."