NZX aims to open up IPO pipeline

Tim Bennett said it was the next few years that he was focused on.

New listings targeted as sharemarket operator reports a bumper half-year with net profit doubling to $6.4m.

Tim Bennett NZX chief executive Tim Bennett wants to line up five or six medium-sized companies to list on the sharemarket next year to keep the pipeline of initial public offers going.

The sharemarket operator yesterday revealed a bumper half-year result with net profits for the six months to June 30 doubling to $6.4 million compared with the same period the previous year.

Bennett said 2013 had been a "terrific year" for capital markets, with the NZX benefiting from an 18 per cent boost in average daily trades and a 57 per cent increase in the daily value of trades.

"Capital markets activity in New Zealand was the strongest it has been in a decade, reflecting a more positive global environment but, more importantly, the impact from a number of structural changes in the market that are not only benefiting NZX, but the economy as a whole."

Those changes included reforms undertaken as part of the recommendations made by the 2009 Capital Markets Development Taskforce and the growth of KiwiSaver, he said.

See the NZX's results presentation here.

The first six months of the year included the first of the Government's state-owned power company floats, Mighty River Power, as well as a number of smaller listings. Bennett said he expected market conditions to remain favourable in the second half of the company's financial year.

Yesterday, petrol retailer Z Energy became the latest to join the bourse and expectations are strong that Meridian Energy, the Government's largest state-owned power company, will list in October.

But Bennett said it was the next few years that he was focused on.

"We are spending quite a lot of time on the IPO [initial public offer] pipeline beyond the next six to 12 months."

Bennett said if the exchange managed to attract five to six new listings next year of around $200 million to $300 million it would start to get investors back into the market, many of whom had not been there for 10 to 20 years.

"It will create a virtual cycle."

A billion-dollar listing on the exchange was worth $150,000 in fees to the NZX but Bennett said it was hard to see more billion-dollar listings outside of the power companies or Z Energy.

"The bigger listings will either come from central or local government."

Bennett said central Government was playing its part but local government had so far been reluctant to follow the same route.

Some have speculated a big listing could come from the banking sector with New Zealand's four largest banks all Australian owned.

Bennett said it was a possibility but was unlikely because of tax and regulatory issues; instead he has been focusing on mid-sized companies.

"There are a large number of mid-sized businesses that have the potential to list. We are knocking on doors."

The exchange is also close to launching its equity derivatives market, which it hopes to get running by the end of September, and to finalising a new growth market by the end of the year to begin trading in 2014.

Bennett said the growth market would make it easier and cheaper to list but would not signal the end of the NZAX - the exchange's alternative market.

"The cost to us [of] running the AX is incremental."

The new market relies on the Financial Markets Conduct Bill being passed into law, which is expected to happen by the end of the year.

The NZX closed up 1c on $1.40 yesterday.