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The end of a New Zealand’s shrinking market?

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  • The end of a New Zealand’s shrinking market?

    New Zealand could see a recovery in its capital markets this year but the number of publicly listed companies may still fall, a law firm is guessing. Chapman Tripp's mentioned that annual stock take of the equity markets says things are looking up for 2019 and 2020 after a tough couple of years. Last year there were no new initial public offerings and in 2017 just one - Oceania Healthcare. At the same time six companies de-listed from the main board – PGC, Tegel, Trilogy, Xero, Fliway and Opus and CBL Corporation also went into administration. However, the market is also likely to shrink this year with a number of takeovers already in the works. Methven, Orion Health and Trade Me are all under offer and likely to de-list. While there is a tendency to fixate on IPO activity as an indicator of capital market health, it’s important to remember that we otherwise have well-functioning and innovative equity capital markets in New Zealand – particularly after New Zealand’s securities laws were comprehensively reviewed and rewritten with the Financial Markets Conduct Act. We expect far more vibrant markets in 2019 and 2020, including long-awaited increased IPO activity. Already we are off to a more promising start in 2019, with the IPO of Napier Port being pursued by the Hawke’s Bay Regional Council following public consultation. We expect the shrinkage to continue, with a number of other control transactions such as takeovers or schemes of arrangement in the pipeline, but this trend will start to finally reverse from 2020.