Listings on the main board have dropped off, with only one company Fliway Group listing on the exchange, after a flurry activity of last year, fuelled in part by the government's sell down of its utility companies. Photo NZME.
Listings on the main board have dropped off, with only one company Fliway Group listing on the exchange, after a flurry activity of last year, fuelled in part by the government's sell down of its utility companies. Photo NZME.
NZX boss Tim Bennett remains bullish about the outlook for new sharemarket floats, despite the lack of listing activity this year that contributed to an operating earnings decline in the exchange operator's first half.
So far in 2015 there has only been one initial public offering, freight operator Fliway Group.
There has also been one compliance listing - G3 Group - on NZX's newly launched NXT market, which is targeted at fast-growing companies in the $10 million to $100 million valuation range.
"I think we are expecting a stronger second half in terms of capital raisings, both primary and secondary," Bennett said. "We're seeing good interest for both the main board and the NXT market ... particularly in the current environment we don't comment on listings pipeline."
He said NZX was taking a long-term view on NXT and would judge its success in three to five years' time.
Potential floats in the coming months include financial risk insurer CBL Insurance, Rank Group's Carters Building Supplies and education roll-up Aspire2 Group.
Chicken producer Tegel this week appointed Goldman Sachs and Deutsche Bank to explore a possible trade sale or IPO.
"Capital raising was slower in the first half of this year than it was the previous year, so our IPO fees were down," Bennett said. "However, the capital markets continue to be very strong. We have seen sharp increases in trading and clearing activity - we hit $100 billion in market capitalisation in the first half."
He said the $1.8 billion sale of Origin Energy's 53.1 per cent stake in Contact Energy this month highlighted the underlying strength of New Zealand's capital markets.
NZX reported a decline in first-half operating earnings as costs outpaced sales growth, fewer companies listed and agri publications suffered in a tighter rural sector.
The sale of Link Market Services boosted net profit.
Profit rose to $18 million in the six months ended June 30, from $7 million a year earlier, reflecting an $11.8 million gain from the sale of its 50 percent stake in the Link shareholding registry, the Wellington-based exchange said.
Stripping out the proceeds of the sale, profit fell 12 per cent to $6.2 million. Sales rose 10 per cent to $34.4 million, while operating expenses rose 19 percent to $22.7 million.
In June, NZX sold its stake in Link NZ for up to $14.3 million to its Australian counterpart, earning an initial payment of $13.8 million.
NZX chief executive Tim Bennett.
At the time it signalled interest in buying the Reserve Bank's NZClear settlement system and has also flagged plans to acquire 100 per cent of Apteryx, which allows investment advisers and providers to manage, trade and administer client funds, and generated annual revenue of $1.2 million in the year ended March 31.
NZX has been diversifying away from its capital markets core business by expanding its footprint in funds management, buying SuperLife in December as part of a plan to roll out new exchange traded funds which it could then offer as a low-cost KiwiSaver option.
The company put the increase in its costs down to $1.9 million of SuperLife expenses and a $1.1 million increase in professional fees due to the Ralec litigation as well as the launch of new Smartshare ETFs.
NZX is in a long running dispute with the former owners of the Clear Grain Exchange, claiming Ralec misled it with "wildly inaccurate" forecasts when the stock market operator purchased the grain exchange in 2009 for A$6.9 million upfront and potential earn-outs of A$7 million.
Sales in the company's capital markets business rose 0.2 per cent to $17.8 million, although its listing revenue was down 12 per cent to $5.5 million.
The soft commodities unit, which includes its dairy derivatives business, reported a 13 per cent decline in sales to $664,000.
The agri-publications and data business revenues declined 5.7 per cent to $5.7 million, as print advertising sales dropped due to "adverse market conditions in the rural sector, with a rapid decline in dairy prices and drought conditions in some regions".
Sales in the funds management business jumped 297 per cent to $4.8 million, reflecting proceeds from the SuperLife acquisition.
Market operations, which includes the Electricity Authority contracts and the Fonterra Shareholders' Market, were little changed at $5.3 million.
The board declared a 3 cents per share interim dividend, unchanged from a year earlier. NZX shares last traded at $1.06, and have declined 11 per cent since the start of the year.
