As if it wasn't enough for New Zealand to be battling through the Omicron outbreak and protesters wreaking havoc in the capital, investors are now having to weigh up how much to worry about Russia's
![Tamsyn Parker](https://s3.amazonaws.com/arc-authors/nzme/dfbaca18-9e17-409f-8ba4-3cacdd7d1762.jpg)
Destroyed buildings seen in the town of Bucha, close to the capital Kyiv, as Russia steps up its attacks on Ukraine. Photo / AP
Brown said one issue was that the conflict came at quite a fragile moment, as the world was at a turning point for interest rates while still recovering from Covid and trying to work out what the new normal is for businesses.
"And it's come at a time when inflation may not be as transitory as perhaps first thought and then what are the ramifications for interest rates?"
The global situation was unlikely to affect domestically focused stocks like Freightways and how many parcels it delivered, or the likes of Ebos and how much pet food it sold, he said.
"For some of those businesses it is meaningless and in many respects that volatility creates opportunity for fund managers. Bigger, broader questions about inflation and how that impacts interest rates - clearly that is quite important for valuations as well."
Yesterday the US Federal Reserve confirmed plans to push ahead with a series of interest rate increases from this month despite the uncertain economic outlook created by war.
Brown said the war hadn't changed two things: that inflation was high and unemployment was low. "And those are two main parameters for most reserve banks so of course they will continue in the direction of higher interest rates.
"The question is are they now more cautious? Do they move a little slower than they would have and do these high commodity prices feed into higher inflation and does it somehow feed into lower economic growth because people don't want to spend?"
Brown said it was just another risk that was being evaluated by markets and the risks were greater for inflation and global commodity prices than for local New Zealand companies.
Higher commodity prices are expected to be beneficial to Australia's economy but less so for New Zealand, whose main commodity dairy exports are less affected by the war.
Armstrong's IPO
Auckland-based car dealership Armstrong's has been back doing another round of non-deal roadshow presentations this week ahead of its decision on whether to proceed with an initial public offer.
The firm, which is one of New Zealand's biggest car dealerships with an annual turnover of close to half a billion dollars, began testing the waters late last year by talking to the investment community.
Stock Takes understands Armstrong's will make a final decision on progressing with the offer by the end of this month.
Armstrong's has 35 dealerships in 15 New Zealand locations and sold 12,000 cars in 2021, from volume to luxury vehicles.
It is the sole distributor for Peugeot (NZ's fastest growing European car brand), Citroen and Opel.
The company is said to be comparable with ASX-listed Peter Warren Automotive Holdings when it comes to brand portfolio and operations, but with higher growth prospects.
For the year to June 30, 2021 Peter Warren's financials show it made a net profit of A$37.5m with earnings before interest, tax, depreciation and amortisation of A$102.1m.
Armstrong's is said to be forecasting Ebitda growth of 21.5 per cent compared to analysts' consensus for Peter Warren of 2.2 per cent.
If it goes ahead, the initial public offer would involve owner Rick Armstrong selling down his 100 per cent stake by up to 40 per cent and the company buying property associated with him.
![Auckland-based car dealer Rick Armstrong is considering selling down a share in his business Armstrong's. Photo / Matthew Hansen](https://www.nzherald.co.nz/resizer/v2/PQV6ITB3JXZZBGASWNXGLLYL7Q.jpg?auth=15017a3fb2173723f59de1398e204688158fc770a576d2dbd3e3d84217541dc0&width=16&height=11&quality=70&smart=true)
But some in the market don't believe the IPO will get over the line, saying that ship had sailed.
Weighing on the listing will be media speculation that Australian vehicle distributor and service provider The Ateco Group has paused its plans for an IPO amid the market volatility caused by Russia's attack on Ukraine.
The Australian reported this week that Ateco held meetings with investors in early February about plans to float by June, but since then no management roadshow had been locked in for a listing.
It noted there were suggestions that the deal was not well supported, although a media adviser working for the company said the float was not off or paused.
No Gull float
One initial public offer that is now definitely off the table is the Gull petrol station business.
Owner Ampol advised the Commerce Commission this week that it was varying the basis on which it seeks clearance for the acquisition of Z Energy.
In November, Ampol sought clearance to acquire Z Energy subject to the divestment of Gull New Zealand Limited, Terminals New Zealand Limited and ALD Group Holdings NZ Limited (together, Gull) by way of either a trade sale or initial public offering (IPO).
But Ampol has told the commission it no longer proposes having the option to divest Gull by way of an IPO.
In its variation letter, Ampol said its proposed divestment deed continued to commit it to the divestment of Gull by way of a trade sale.
![Gull New Zealand will not be floated on the stock exchange. Photo / Rachel Canning](https://www.nzherald.co.nz/resizer/v2/ZBD2YN6JWONWCTMBKG6ERSQ6ZA.jpg?auth=6fca242845641b19795fba0bed6146920bbc7b5528aa1d4c2b7044696263906b&width=16&height=12&quality=70&smart=true)
Last year UBS analysts estimated the Gull NZ business could be worth A$400m to $600m, according to the Australian Financial Review.
Gull is said to be making A$70m to A$80m a year with petrol retailers fetching 8.5-times Ebitda.
Ampol acquired Gull for NZ$340m in 2017.
NZX targeting Oz companies
Stock exchange operator the NZX revealed this week at a New Zealand Shareholders' Association event that it is targeting Australian companies for potential listing here and on the ASX.
Sarah Minhinnick, head of issuer relationships at the NZX, said her team was actively engaging with companies in Australia.
"I think there are quite a few companies in Australia that have operations or connections to New Zealand where it would be entirely sensible for them to have a New Zealand listing, whether it is a dual listing or some kind of arrangement where they are listed on both exchanges as well can make a lot of sense."
Minhinnick said because of continuous disclosure rules she was hamstrung with what she could say about the pipeline of future listings for this year.
"What I will say is we are optimistic about the pipeline. I think a lot of companies in the last two years have really realised the value of having access to capital when they need it - whether that is for growth or acquisition or if there is a crisis like Covid or conflict."
She said it was also becoming harder for companies to access bank debt.
"So we are having a lot of conversations around that where traditionally some of these companies might have taken out quite big bank facilities."
Mini-exchange's pipeline
Meanwhile Catalist, which received a licence to open a public market in June last year, is forecasting 16 new listings this year.
Catalist is founded and headed by Colin Magee, previously the head of conduct at the Financial Markets Authority. So far it has managed to list just one company which is open to retail investors.
"We have been working hard since we got the public licence to get business on the market. Obviously they are smaller businesses that need quite a lot of hand-holding to get that far. We had our first one just before Christmas."
![Colin Magee, chief executive and founder of Catalist. Photo / Supplied](https://www.nzherald.co.nz/resizer/v2/HMF4RZ35LU4RFI33OKSWFZNC44.jpg?auth=3057d5133567fecffc9283c2fa69726d6ef75adb64bc80a5eaa00c9466dd184e&width=16&height=11&quality=70&smart=true)
But Magee said it had announced another one this week and should have three or four coming on board this month - although some of those would be for wholesale investors only.
"Our target by the end of the year is to have 16 on there and we think we can beat that target, available to the general public."
Magee said Catalist's plan was to help those businesses to grow and then feed the NZX listing pipeline as well.
"Practically all the businesses we are talking to, coming on to our markets, their aspiration is to grow so we are not an end location for businesses and it's a stepping stone whilst businesses are of that size."