Overseas sharemarket listings raise concerns

Who will be left on the NZX? Photo / Richard Robinson

Two companies with strong New Zealand links are weighing up overseas sharemarket listings as the local market struggles to attract new floats.

Eftpos terminal provider SmartPay yesterday said it was investigating an Australian listing while AborGen - a tree propagation company whose operations once formed part of New Zealand forestry giants Fletcher Challenge and Carter Holt Harvey - announced plans for an initial public offer in the United States.

New Zealand's sharemarket has only had two new listings this year - a tiny float by candle maker Ecoya and a business recapitalisation deal by property company DNZ.

The announcements by SmartPay and ArborGen also come as paint and resin manufacturer Nuplex has talked of moving its listing domicile to Australia.

SmartPay managing director Ian Bailey said the company would maintain its New Zealand listing for now, but he couldn't rule out de-listing from the local market in the future if an Australian-only listing proved to be better for its shareholders.

"Almost all of our 1000-plus shareholders are New Zealand-based. So there is value in maintaining an NZX share listing at this point.

"But right now it's fair to say the capital markets aren't doing particularly well in New Zealand. There is a whole lot of regulatory change making it hard to raise money, especially as a low-end technology stock."

Bailey believed SmartPay was undervalued on the New Zealand market and it could be revalued in Australia because there were more small technology stocks there.

An ASX listing would provide SmartPay with access to a much larger capital market, as well as more acquisition targets - both of which would help the company grow, he said.

Market commentator Arthur Lim said the possibility of SmartPay leaving behind its New Zealand listing and the decision by ArborGen to hold its IPO in the US were examples of more losses to the New Zealand market.

"One of the real dangers for the New Zealand sharemarket [is that, though] every other market in the world certainly in the last 10 years has grown in leaps and bounds, our market is one that is shrinking."

However, Lim said SmartPay investors should be aware that a listing in Australia was not a panacea for share price performance or access to capital for companies crossing the Tasman.

"The company [that chooses to go to Australia] has got to stack up very well first."

US-headquartered ArborGen is one third owned by NZX-listed Rubicon and was formed in 2000, combining the biotechnology forestry research expertise of US firms International Paper Company and MeadWestvaco (then Westvaco) with those of Rubicon (then part of Fletcher Challenge) and Genesis Research and Development.

ArborGen has filed a registration statement with the US Securities and Exchange Commission for a proposed initial public offering, which could raise up to US$75 million ($101 million).

The registration statement said plans for the money raised included a new manufacturing, research and development laboratory and head- quarters facility, expansion of container production capacity and repayment of all outstanding debt under a revolving credit facility.

The number of shares to be offered and the price were not specified.

Lim said it made sense for ArborGen to list in the United States, which could value its potential.

"The New Zealand market glaringly lacks a long-term investment horizon and that's why we always see our companies being systematically taken over by offshore companies."

Rubicon shares closed up 1c at 80c yesterday while SmartPay closed down 0.01c to 3.3c.

MAKING MOVES

Smartpay

* Listed in New Zealand.

* Considering ASX listing.

* Provides telecommunications products including voice-over IP, broadband and eftpos terminals to retailers.

* Products include gift cards, secure internet payment, mobile top-up and Wi-Fi.

Arborgen

* Not currently listed.

* Considering US listing.

* Develops high-value tree seedlings using conventional breeding and biotechnology.

* Sold 240 million seedlings in the year ended May 31.