Breathing fire into alternative market

Brett Wilkinson sees his plan as a less public version of Dragon's Den. Picture / Martin Sykes

Two wonderful kids, says Brett Wilkinson as we run through his vital statistics.

"I had to give one of them a hurry-up this morning - he's lost my skateboard."

Sorry, whose skateboard?

In the same breath Wilkinson reveals he has also taken up surfing.

And while he might not be the only 52-year-old sitting out in the waves these days, he is surely the only broker you'll see skating the streets of Devonport of an evening.

The new hobbies seem appropriate for one of the financial community's more affable characters.

There's always been a hint of Southern Californian in his accent and his sentences often sound like they might end with the word "dude" (although they never do).

But Wilkinson is the first to admit that life hasn't been quite so laid back lately.

He has set up his own investment company, and suddenly after 20 years as a broker he has his own money on the line.

His firm is called Wilkinson & White (there isn't anyone called White involved, it just wouldn't have sounded right with only one name).

He has his own office in Vulcan Lane - with a pool table and a table soccer game.

More importantly he has placed his first two companies on the NZAX and has more in the pipeline.

The companies, Vistron and Holly Springs, are unused spin-offs of the defunct Newcall Communications.

They will be used to give business a way of reverse listing on the exchange at a sizeable discount to conventional methods.

Wilkinson is hoping to create a blueprint which will change the way small companies come to market.

If it works, the NZAX - which has a market cap of about $630 million - should be above $1 billion within three years, he says.

In fact, the NZAX will do better than that, he adds after pondering his initial target.

That's because he doesn't believe he'll have the niche to himself for long. He expects others to quickly follow his formula if it proves lucrative.

That doesn't bother him if it helps turn the NZAX into a bustling market for small, high-growth stocks.

He has set up an NZAX-focused website (www.shares.net.nz) to build a group of like-minded investors.

The key to the success of the market is keeping costs low, he says.

Recent listings suggest a shell company is worth between $500,000 and $750,000, he says. "But the arrival of Vistron and Holy springs will see this drop dramatically."

A traditional listing can cost a company 5 to 7 per cent of what it plans to raise.

Costs include broker sponsorship, underwriting costs, brokerage, printing marketing and executive time.

The Wilkinson model should allow companies to reduce these costs by up to half.

More significantly they can pay the costs by issuing scrip to the shareholders in the shell.

It's all a bit like a less public version of The Dragon's Den.

"It's funny, I look at that programme and this is exactly like taking those people, those ideas, through the reverse listing process," says Wilkinson.

The listings will be below the threshold at which it is worthwhile for the big banks and brokers to get involved, but further up the chain than the standard venture capital investment.

Wilkinson is looking for businesses which are well established with growing revenue, companies "at about the break-even point looking for some growth capital and public exposure. And looking for experience on the board ... "but they've got to be well managed".

How to identify those kind of businesses is often the difficult bit, he says.

"Its not like a Vector where you tally up the future cashflows. There is a certain amount of gut feel and you have to take the risk with it. It's that old saying that analysis is often an art, not a science."

Wilkinson has his own money on the table. He holds a 70 per cent stake in Holly Springs and Vistron.

But unlike television's Dragons, the money is not the spare cash of the super wealthy. Wilkinson is no Rich Lister.

"Put it this way: I've got a big incentive to make this work," he says.

There is always a risk in doing something new and he says he doesn't want to hide that from potential investors.

But Wilkinson, who has been passionate about the stock market since he was 14, is not averse to risk.

"My father bought me some Broadlands shares when I was 14, and ever since then I've just loved it."

When he left school he tried his hand at accounting but couldn't really get as excited about the pure number crunching side of the business world.

While working as a trainee manager with a supermarket chain he had a chance encounter with Craig Heatley that changed the course of his life.

During the oil trading boom of 1983 he bumped into Heatley and "the Rainbow guys" at the stock exchange.

Heatley and the team picked up his enthusiasm, and Wilkinson found himself in the thick of the excitement as the mid-80s market boom unfolded.

"I was doing a bit of everything - a bit of equities and I also helped manage Rainbow's End," he says.

"It was an unreal period, but one I'm pleased to have been part of."

It's easy to look back and be critical of the era, he says.

Markets were relatively unregulated and a lot of people lost a lot of money.

"But people like Mark Weldon, Brian Gaynor and Bruce Sheppard have helped make the sharemarket a much more credible place to deal in," he says.

"Even five years ago people didn't want to list; now there is a real interest."

From Rainbow, Wilkinson went on to become a broker with several firms, the last being Direct Broking.

He won't reveal the details, but says there was a moment of epiphany when he was working on a deal and realised he had the knowledge and networks to be doing it for himself rather working for a broking fee.

Since deciding to go it alone he has worked closely with the likes of Plus SMS chairman Jim Bracknell - now chairman of Vistron and Holly Springs - Roger Wallis at Chapman Tripp and Geoff Brown at the stock exchange to ensure his idea is well grounded in reality.

"I'm sure that the NZX will be monitoring progress of these two shells, and to some extent the success of future reverse listing will determine the future," he says.

The NZX has been supportive. Brown, its products manager, has said he hopes the concept will provide a useful stepping stone for smaller companies.

The decision to endorse the listing of Holly Springs and Vistron didn't require any changes to NZAX listing rules although it did prompt a review of the regulations to ensure they would fit comfortably.

There is nothing particularly new about bringing new companies to market through the leftover shells of failed listings.

But Holly Springs and Vistron aren't technically shells, Wilkinson says. They are blank slates.

Unlike shells they have no trading history so they aren't subject to any litigation from old shareholders; they have no creditors and no employees.

Critics have pointed out that the other shareholders - there are about 1700 in each company - will have no control over what kind of business Wilkinson gets them into.

He answers them: "Well these two shells have been sitting in the bottom drawer for five years. So surely it doesn't matter what goes in there because they've got a chance. They've got no chance the way things stand."

Brett Wilkinson

* Age: 52.

* Born: Tauranga.

* School: Westlake Boys.

* Lives: Auckland's North Shore.

* Family: Married with two teenage children.

* Interests: Surfing, golf, horse breeding.