John and Michael Chow will delist their listed property investment vehicle, Chow Group, saying NZX's plans to ditch the small-cap markets and impose one set of rules and costs aren't attractive to them.
The brothers, who claim to run a property empire worth more than $200 million and are known for operating strip clubs and brothels, bought a small parcel of shares yesterday, taking their collective holding above the 90 per cent threshold needed to trigger compulsory mop-up provisions under the Takeovers Code. The brothers will send a notice to shareholders with a price later this month and will delist the entity once they've completed the takeover, folding it back into their privately held group of companies.
"We listed on the NZAX as it was an appropriate platform for the operations of CGL but now that NZX is moving to a single equity market and doing away with the NZAX, it's one set of rules and costs for all," chair John Chow said in a statement. "It doesn't make sense for CGL to remain listed."
Stock market operator NZX decided to drop the small-cap NZ Alternative Market and NXT bourse in a wide-ranging review of its operations aimed at reinvigorating confidence in the market and spur activity. NZX is offering a transition period for firms on the small-cap bourses to meet the requirements of the larger main board and has received a mixed response with some planning to stay and others clearing the decks for an exit.
Chow Group joined the NZAX in 2016 through a reverse listing of shell company RIS Group as a means to tap investors willing to fund aspirations to expand their empire, saying at the time they had "grand plans for further expansion into the accommodation and hotel markets in New Zealand". However, the Chows today said their group doesn't need to be publicly listed because it has ready access to private funding.
