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Goodbye volatility, hello IPOs: ASX is bullish on new listings for 2024 including from NZ firms

Business / news
Goodbye volatility, hello IPOs: ASX is bullish on new listings for 2024 including from NZ firms
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The ASX’s New Zealand listing head says it has a strong pipeline of companies considering joining the Australian Stock Exchange - but a listing shouldn't only be an exit strategy for existing shareholders.

Blair Harrison said conversations with New Zealand firms hadn’t slowed down with the pandemic disruption, and the Australian Stock Exchange (ASX) is “bullish” about 2024.

Listings have been scant in New Zealand for the NZX and ASX of late, with meal-kit company My Food Bag making its debut in March 2021 and chemicals company DGL listing on the ASX and NZX in May 2021.

The meal-kit initial public offer (IPO) hasn’t been great for investors, with My Food Bag suffering from a weak share price. It said recently it would delist from the ASX to save money, as it announced a 60% profit fall.

Another NZ company, buy now, pay later firm Laybuy, has delisted to save money after a disastrous stint on the Australian exchange which saw the value of its shares plummet.

Campervan company, NZX-listed Tourism Holdings also picked up an Australian dual listing in December 2022.

Harrison said listing was a great way for investors to exit, and a great way for private equity or venture capital to exit a business as well, but "it just shouldn't be the only reason".

"Listing should be a beginning, not the end."

There are more than 60 NZ companies who have a sole or dual listing on the ASX, including A2 Milk, cloud accounting firm Xero, Straker Translations and medical company Aroa Biosurgery.

Harrison said as a result of the pandemic some firms which were considering listing had chosen to remain private companies for longer, or taken private funding rounds.

Christchurch-based firm Seequent had been widely rumoured to be weighing up a listing in 2021, but was one of a spate of buy-outs that occurred instead, with a US firm snapping up the business for more than $1 billion.

Harrison said 15 New Zealand companies had listed on the ASX since it opened its New Zealand office in 2019.

In 2021 the ASX had a bumper year, attracting double the number of listings than it had expected.

Harrison said Covid money pumped into economies and low interest rates spurred on the market, with "really high activity".

But things had “come to a bit of a grinding halt” when Russia invaded Ukraine and volatility hit sharemarkets, along with higher interest rates.

There had been more than 100 new listings in 2022, but mostly from the mining sector, with battery minerals firms looking to raise funds and strong interest from investors.

"That's still an important industry that people want to contribute to."

This year had been a "little tight" for listings, Harrison said, but once sharemarket volatility settled, the IPOs would start again.

"We're really looking forward to a couple of listings that have been in the press, that may happen in the second half of 2023."

One of those potential listings could be NZ transport firm Mondiale, which on Thursday said an IPO was being considered.

Australian industrial company Redox is also tossing up a listing.

"We don't know if they're going to IPO, it has been rumoured in the press. If that were to happen that would be a good test of the market, and certainly pave the way for others to come through."

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