NZAX progress disappoints exchange

New Zealand Exchange is disappointed with the progress of its alternative sharemarket launched nearly three years ago with the aim of attracting smaller companies.

The NZAX, intended to make it easier and cheaper for small to medium-sized companies to raise capital through the public markets, has grown from 12 to 28 companies.

But NZX head of products Geoff Brown said a review of the market had been prompted because "we might have wanted to have seen a better outcome than we've got". However, only three companies had listed on NZAX this year and, over the three years, only two (Seeka and Smith's City) had made the step up to the main board.

Brown said differences from listing on the main NZSX board had not really been utilised. AX companies were not required to get shareholder approval for material transactions but only one company had used this over three years. AX companies were also not required to have independent directors but most were not aware of that.

Shorter hours and a minimum increment (2c) in which a stock traded had not resulted in more custom.

The NZAX's market capitalisation had grown to $657 million from $219 million in November 2003.

Brown said the review showed raising capital via the NZAX was widely viewed as an efficient means of funding further growth. And there was no groundswell to change the listing rules.

The environment for attracting new capital had never been more competitive.

- NZPA