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Share delight

Nurses and students aren’t stereotypical investors, but Xero’s runaway success, key market reforms and a batch of company floats are bringing a new glow to shares.

Getty Images
Getty Images

Take a little Capital Market Development Taskforce, started by then Labour Minister Lianne Dalziel. Throw in a few grains of Fonterra Shareholders’ Fund. Add a spot of Xero.

Pinch yourself for the good luck of emerging from the global financial crisis in okay shape compared to others, add some clever thinking from Scandinavia and, hey presto, you’ve got the boom in public sharemarket listings that’s been building since early last year.

Veteran merchant banker Rob Cameron has been at the heart of years of efforts to create this dynamic, ever since the wily principal at Cameron Partners took the chairmanship of the taskforce, formed by Labour and enthusiastically endorsed by National when it came to power in 2008.

InvestBox1As a result, when Lehman Brothers collapsed and brought on the financial crisis in September 2008, Cameron and his band of financial eggheads had already been puzzling in depth over New Zealand’s moribund equity markets.

Whereas other countries reacted in panic with knee-jerk, politically inspired regulation, Cameron reckons New Zealand’s financial markets emerged with world-leading reforms. “Everyone else reacted in a bizarre way, as you’d expect, to the financial crisis, whereas we were lucky. We had something established. We reacted early to some of the pinch points and we said we were only doing that to put things into a holding pattern until we got a framework.”

It took until 2012 to get that framework, embodied in the Financial Markets Conduct Act, the implementation of which began this year.

Overseeing the new regime is Financial Markets Authority chief executive Rob Everett, who has seen it all in his career in financial markets in the UK, US and Europe. “One of the attractions of coming into this set-up in New Zealand,” he says, “is it actually got pretty thoroughly consulted on and looked at by people who could understand how markets would work in New Zealand. It reflects real design, rather than things being slapped on top of each other.”

The way Cameron tells it, New Zealand has moved on from the dark days of the late 2000s. Back then, hardly a single share listing or IPO (initial public offering) came to market, and some of those that did get that far failed because investors were too risk-averse to look at even strong offerings.

Now, hardly a week passes without a company either signalling a listing, issuing a prospectus or listing on the stock exchange for the first time.

Heavy hitters (from left): Merchant banker Rob Cameron, former NZX chief executive Mark Weldon, Financial Markets Authority chief executive Rob Everett.
Heavy hitters (from left): Merchant banker Rob Cameron, former NZX chief executive Mark Weldon, Financial Markets Authority chief executive Rob Everett. Photos/APN


Cameron believes there are other factors running in New Zealand’s favour, and which mean the current listings rush should be sustainable and not just a flash in the pan at the top of an economic recovery.

First, there was the Fonterra Shareholders’ Fund, which Cameron Partners was helping to design at the same time as the taskforce was working.

Farmers wanted to be able to trade shares in the co-operative, but there were too few of them to make the market in Fonterra shares liquid. Farmers wanting to get in or out of the market wouldn’t be sure they could do so, or at what price.

The answer, says Cameron, came from looking at Scandinavia’s Nordic First North market, which requires the involvement of “market-makers”, who guarantee at all times to offer buy and sell prices for shares listed on that market. That pushed the New Zealand Stock Exchange (NZX), which was to run the Fonterra Shareholders’ Fund, to create a new trading platform on which market-making would occur.

Then there was Xero, which Cameron Partners helped to float with an offer of $15 million in new shares six years ago. The company was worth $55 million after that float. Today, its market capitalisation is $3.3 billion. Yet Xero is still to deliver a profit, despite massive revenue growth and successfully attracting heavy-hitting
US investors and board members.

“So Xero now works away and then Xero becomes very, very successful,” says Cameron. “A lot of people who made a lot of money out of that were actually quite savvy, sophisticated investors, and that’s built an understanding and taste for risk that now has people looking for it.

Rod Drury.
Rod Drury. Photo/David White

“We’ve automatically built a risk market in New Zealand,” he says. That might not sound like much, but it’s a fundamental reason not only for the recent upsurge in new company listings on the NZX, but the catalyst for a new NZX “growth market” that will launch later this year for high-growth, high-risk companies seeking investors.

“Rod [Drury, Xero chief executive] keeps going and telling other growth companies his growth story as if they should follow him,” says Cameron. “But the fact that Rod’s story has been successful has actually made it different for everyone who’s followed, because he’s grown a risk market.”

Xero leads the pack as New Zealand’s largest “internet company”, as defined by the Economist, which ranks New Zealand 15th among countries surveyed for the size of their top three online companies. Also on the list are Diligent Board Member Services and auction site Trade Me.


Back in about 2010, when the Fonterra Shareholders’ Fund was in gestation, then NZX chief executive Mark Weldon wanted the business but couldn’t make a new trading platform suited to market-makers stack up commercially. Cameron describes “a eureka moment” over a coffee with Weldon when he explained the market-making concept behind the Nordic First North market: “This needed to be a quote-driven, not an order-driven market.”

In other words, instead of share brokers waiting for someone wanting to buy or sell shares in illiquid stocks, there needed to be someone offering a price at all times.

The NZX main board, comprising the biggest listed companies, already had that, and it was an obvious answer for smaller stocks of the sort listed on the NZAX alternative market, which had stuttered along since it was launched in 2003.

With market-makers providing liquidity, share prices should be higher because investors would be more confident about being able to move in and out of the stock.

“People are willing to put up money if they believe they’re going to get liquidity in the not too distant future and the benefit of proper public company rules, regulations and architecture.”


This, for Cameron, is what distinguishes both the growth market and the rash of IPOs from finance companies, in which unsophisticated retail investors chased high interest rates with no thought to risk, based on limited public disclosure requirements and with no ability to quit their investment when the 2008 crisis hit.

“What we don’t want to find is that retail punters get involved [in the new growth market] and suddenly they weren’t aware of the risk.” Retail investors seeking higher yields than today’s low bank interest rates would be better to steer clear of the growth market anyway, since these companies generally won’t be initially paying dividends.

Yield stocks, such as the partially privatised electricity companies, make more sense for investors seeking steady income, he says.

Indeed, Cameron argues, the partial sale of state-owned enterprises completes the puzzle of New Zealand’s resurgent sharemarket. The sell-downs gave investors more choices and provided a new home for the “wall of money” from KiwiSaver.

Perhaps even more importantly, it attracted interest from international investors. He cites Kleiner Perkins, one of the biggest private equity funds in the US, and Horizon Ventures, the venture capital vehicle for the man Bloomberg says is Asia’s wealthiest, Hong Kong-based Li Ka-shing. “Some of them are saying this looks like the next Silicon Valley,” says Cameron.

But Cameron warns growth market stocks are not for the faint-hearted. “The growth market will see more losses,” he says. “It has to. It won’t work if we don’t see more losses, but hopefully New Zealand will get to do failure well. The way we do it at the moment always looks for victims and blame and pointing, whereas you should only be doing that if there’s evidence of fraud or misrepresentation or bad behaviour.”

Everett takes a more temperate view. “New Zealand’s a place where memories are long, or so it seems to me,” he says. “Lots of people here still talk about the 1987 sharemarket crash.

“In a buoyant market, part of the risk we see is people forgetting they have to make a risk decision and be willing to lose what they put in. While trust is fragile, it wouldn’t take too much to knock it again.”

A wolf among sheep

There’s more to doing due diligence on an investment than having a beer with its backer. by Suze Metherell

On the day “wolf of Wall Street” Jordan Belfort, the convicted fraudster and subject of the recent Leonardo DiCaprio film, gave a sold-out address in the Langham Hotel’s 1400-seat Great Room in Auckland, 40 people were listening to an NZX seminar on investing in stocks in a bland meeting room overlooking the harbour.

Diane Maxwell: there’s no magic formula.
Diane Maxwell: there’s no magic formula. Photo/APN

Tickets for the motivational spiel from Belfort, who says to be rich you have to think rich, started at $139. But those prepared to pay $859 could drink cocktails with the wolf himself, get a signed copy of his book and have their pick of the seats. NZX charged nothing for its hour-long lunchtime session co-sponsored by the Commission for Financial Literacy and Retirement Income. And there was free water.

Diane Maxwell, the Retirement Commissioner, rolls her eyes at the mention of Belfort’s evening, at which punters were apparently unfazed by the irony of the film’s last segment, in which a washed-up Belfort is shown shilling his pitch to a dowdy group of, er, Aucklanders.

The fear of regret or missing out is what motivates some to pay close to $900 to hear a secret formula when a free financially sound service exists, says Maxwell.

“As the clients of [Ponzi schemers] David Ross and Bernie Madoff have probably worked out now, there isn’t a magic formula,” she says. “If you ask, ‘Why aren’t more people going into the sharemarket?’, possibly it’s because we’re not very good at getting the right professional advice about what we should be doing with our money.

“Looking someone in the eye and having a beer with them is not due diligence, and a really good fraudster will look you back in the eye and buy you another round.”


Compared to the rest of the world, Kiwis are hesitant equities investors. In 2012, Reserve Bank data showed 10% of New Zealand households had direct investment in domestic or overseas shares, compared to 34% of Australian households.

Local households with equity investments grew to 12% in 2013, in large part off the back of the growth in KiwiSaver funds and the Government’s asset sales programme.

“We’re definitely seeing more money in the stock market and one of the reasons is more Kiwis have KiwiSaver investments in the stock market. But they’re not necessarily completely aware of that,” says Aaron Jenkins, head of markets at NZX.

Sue Hurst, nurse and investor.
Sue Hurst, nurse and investor. Photo/Simon Young

“If you’ve got money in managed funds, some of that is likely to be invested in the stock market.”

But others are investing above and beyond their KiwiSaver. Sue Hurst is a nurse and has been buying shares for more than a decade. She went along to the NZX seminar to further educate herself and was looking into bonds to diversify her portfolio.

She manages the shares she owns online through her bank’s securities trading portal, and researches her investments. Although she has been speculative and admits to “a few duds”, she’s happy overall with her stocks.

Also among the seminar’s small crowd were several students, most there through the University of Auckland’s investment club. Law and commerce student Elizabeth Vincent is co-president of the club, which has 500 paid student members with $140,000 worth of investments in cash, bonds and stocks.


The club is a “value” investor, following the teachings of Warren Buffett, the US investing doyen. Their most recent punt was in shares of Restaurant Brands, owner of KFC, Pizza Hut, Starbucks and Carl’s Jr franchises.

“Student loans, KiwiSaver and the like are significant decisions for students and it’s hard to say how well they understand where their money is going or the importance of this long term,” says Vincent.

Students and nurses aren’t necessarily whom most New Zealanders would envisage when thinking of a share investor.

But the NZX’s seminar crowd was more diverse than the typical band of grey-haired pensioners and slickly dressed fund managers who attend annual shareholders’ meetings.

“If I asked you to picture someone at a barbecue talking about their share portfolio, you’d probably imagine someone very wealthy, maybe a bit unlikable,” says Maxwell. “Why is it we have this different perception of what an investor in rental properties is versus an investor in shares? Yet in reality, someone could as easily go and buy shares as go and put money into a rental.”

In part, both Jenkins and Maxwell concede, market mystique is what allows Wall Street wolves to take advantage of investors. “I’m not sure what the wolf of Wall Street is up to tonight, but in terms of NZX, we would certainly like to expand this programme beyond the basics,” says Jenkins. “The depth of our education, rather than one or two sessions on it, will take away the mystique.”

The benefits of a more buoyant equities market wouldn’t flow through only to shareholders and listed companies, says Maxwell.

“Someone who buys shares in a company, who invests in that company, who owns a piece of that company and helps to build capital is doing something really quite powerful for the economy more broadly. I don’t know if people quite get that.”

Fund director Carmel Fisher: don’t buy hope.
Fund director Carmel Fisher: don’t buy hope. Photo/David White

IPO fever

A love of the shiny new is what pulls investors into share floats. by Jonathan Underhill

US adventure sports camera company GoPro’s initial public offering turned founder Nick Woodman into a billionaire, and investors who bought the shares doubled their money in just four days of trading on New York’s Nasdaq market.

The California-based company’s high-definition cameras are a hit with every kind of thrillseeker and the videos users post are GoPro’s best advertisement. Search it on YouTube and it brings up 15 million-plus results, with more than 500 million views. There are more on Instagram, Facebook and Twitter.

There has been disquiet among some analysts that all that video content means GoPro is being valued as a media company, making it more valuable than a maker of gadgets would be. Making money from that content will start in the next few months and in the meantime the stock has drifted back.

GoPro ticked some of the main “Investments 101” boxes an investor should look for. Like Facebook and Twitter, it was a first mover (first in its market niche). Woodman held on to most of his shares rather than take fast profits, and most of the funds raised will help the company grow and repay debt. It has a track record of sales growth and profits. The company’s board includes Tony Bates, who ran Microsoft’s Skype unit, and Peter Gotcher, chairman of Dolby Laboratories.


You couldn’t tick all those boxes for all the companies rushing to IPOs in New Zealand.

Serko, which listed on the NZX in June, is an early-stage business forecasting two years of losses as it grows sales of its corporate travel booking and expense management solution in the cloud. IkeGPS, which can take measurements from a distance using laser and GPS, is another unprofitable firm chasing sales. These are known as growth or momentum stocks, looking to scale up in the hope that profits will follow.

Fruit distributor Scales Corporation is already profitable, but existing shareholder Direct Capital will pocket most of the proceeds of its IPO. Gentrack, which sells utility and airport management software, is also profitable, but of $99.1 million raised, only $36 million is new capital, and that will be used to repay debt and cover IPO costs.

Cinema and movie software firm Vista Group is raising up to $100.3 million, but only $40 million of it is new capital, which will be used to acquire two firms operating in the same market. Much of the rest will go to existing shareholders, although they will keep a bit under half of the company.

Metro Performance Glass is raising $244.2 million selling shares at $1.70 apiece. Metro’s history includes being seized by its creditors in 2012 after a write-down that contributed to a $200 million loss. Ownership shifted from one private equity firm, Catalyst Investment Managers, to another, Crescent Capital, the lead vendor. Owners will pocket about $230.5 million cash and will also receive shares.

Hirepool, the unprofitable equipment hire firm, couldn’t get its IPO over the line. Others in the wings include truck fleet software supplier ERoad, scheduled to release a prospectus mid-July, and may include Orion Health, PowerbyProxi, WhereScape and Triplejump. It is a veritable stampede.

“My biggest fear about this whole pipeline of IPOs is they are seen as the new, shiny thing,” says Carmel Fisher, managing director of Fisher Funds and an investor since 1984. “New Zealanders should own shares. I’m pleased that through KiwiSaver more have exposure. Do we need a pipeline? No, there are enough companies out there.

“When you think about the asset sales last year, they were not very exciting but at least they had a track record and a decent yield,” she says. “Some of these others are selling the dream, selling the hope.”

How many more could come to market? It depends who you ask. Investment banks reap big fees from share sales, 2.75% of gross subscription monies for lead manager Macquarie in Vista’s case, and each may have five or six companies they’re working with. Estimates of the pipeline range from 25 to as many as 40 this year. Many won’t get over the starting line.


The NZX, which is launching a new, easy-to-enter market, loves new listings because they generate fees and deepen the pool of shares to invest in. A listing goes off with a lot of hoopla; spin-doctors start grooming business journalists well before a prospectus is released, whispering numbers.

Sometimes celebration is warranted. Summerset Group shares have gained more than 140% from their 2011 IPO price of $1.40. And Xero, like GoPro, was a first mover. Like Serko and ikeGPS, it’s a momentum stock, perhaps New Zealand’s greatest, given it has soared more than 2000% from a $1 IPO price in 2007.

Then there are the failures. Moa Group shares have more than halved in value since the brewer went public in late 2012, despite the presence of marketing whizz Geoff Ross. Energy Mad has shed three-quarters of its 2011 IPO price after struggling to hit its targets for energy-efficient light bulb sales.

Brian Gaynor: new offerings are too diffuse.
Brian Gaynor: new offerings are too diffuse. Photo/David White

That’s not to say many of the current crop won’t float. Long before a prospectus is registered, investment bankers and executives talk to institutional fund managers who make the initial market for the shares. These are professional investors, backed by teams of analysts who oversee billions of dollars of pension funds and private wealth, and play a key role in setting the price – valuing the company – through a book build. They’re the people who turned up their noses at Hirepool, which Fisher says “just didn’t pass the smell test”.

Others did, even though they didn’t tick all the Investment 101 boxes. Gentrack, a profitable enterprise software supplier to utilities companies, has gained more than 10% since listing last month.

But as Milford Asset Management principal Brian Gaynor notes, all this activity “has certainly taken the puff out of the market”.

“A spate of IPOs distracts analysts’ and management attention,” he says, and he warns that there’s no pattern to the new companies coming to market. “They tend to be in different sectors. It’s not like it’s a lot of property companies and you get to know the property sector.”

Tony Gibbs, a veteran corporate brawler who now spends more of his time in Matakana on the mandarin orchard he planted for his retirement income, says: “People who invest in the stock market by and large are optimists. There’s a lot of personal responsibility for people buying stocks. Don’t bleat afterwards unless you’ve been told porkies.”


Gibbs still buys shares and the first question he asks is where the money’s going. “The world’s changed in the past few years regarding floats,” he says. “In bygone eras, companies came to the market to raise capital to buy machinery or take over a business. With the advent of private equity, it’s a whole different ball game.

“If the money’s going to an exiting person, you’ve got to ask why. The answer you don’t want to hear is that private equity guys bought it cheap and stripped it to the bone. Have they made it very skinny so they can produce numbers they can float and relieve themselves of most of the shares? That’s not increasing the value of the company.”

But private equity can do “a very good job in smartening up a business and getting it on a good track”, he concedes. Has the company been done up or pumped up? “Only a good analyst can give you a steer on that.”

The stock market success of Xero has encouraged a new wave of technology stocks on the NZX, including Jade’s security software spin-off, Wynyard Group, GeoOp and SLI Systems. And following on are, typically, some retail investors looking for get-rich-quick gains.

“There are always going to be investors out there that want to be this year’s big winners,” says Fisher. But “you do not make five times your money three years in a row, even in the strongest bull market”. Shares making those sorts of gains “will be on momentum, not fundamentals”.

Moving on from the NZAX

New Zealand’s alternative stock exchange is being remade as a growth-focused market. by Tina Morrison

A decade on from the creation of the Alternative Stock Exchange, or NZAX, the sharemarket operator is giving its smaller market platform a revamp in an attempt to do better at linking growth companies seeking capital with potential investors.

New Zealand is a nation of small businesses, with 97% of enterprises having fewer than 20 employees.

Some smaller, growth-focused companies struggle to get access to capital, as they don’t fit the criteria for bank lending and have exhausted the resources of their friends and family, making public equity an attractive option.

For this reason, many stock exchanges operate a market for smaller companies, such as the London Stock Exchange’s AIM market, previously known as the Alternative Investment Market.

The New Zealand Stock Exchange launched the AX with a “1st XV” initial group in late 2003 to provide smaller and medium-sized companies with efficient and cost-effective access to public capital.


“The driving force in terms of the development of the AX was to make it cheaper and easier to list,” says Geoff Brown, NZX markets development manager at the time. “There was a recognition that the requirements of the main board may be a little bit too onerous for smaller companies to meet.”

But with just 18 listed stocks, the market capitalisation of all the AX’s shares, at $664 million, has declined about 25% in the past year, while the benchmark NZX 50 index is up 15%.


For Wool Equities, which was formed to allow Fonterra-style trading exclusively among 9500 strong-wool growers following the disestablishment of the New Zealand Wool Board in 2003, listing on the AX has been a failure.

“It’s probably been an impediment to the business rather than an encouragement,” says chairman Cliff Heath. “It hasn’t been a great experience.”

He believes the stock exchange should do away with a minor board, and companies should jump instead from an unlisted facility to the main board once they’re of a sufficient size to attract institutional investment.

“Being listed has been no advantage whatsoever, but it’s put a whole lot of rules on us that cost a lot of money to adhere to,” he says.

Not all companies have been disappointed by the AX. For wine company Foley Family Wines “it was a good stepping stone”, says chief executive Mark Turnbull, who’s eyeing a move to the NZX main board. Last month’s sale of $10 million of shares to institutional investors “would have been difficult to do if we weren’t listed in any shape or form”, he says.

Commerce Minister Craig Foss this month approved a new NZX growth market, which now needs an all-clear from the FMA before launching. NZX chief executive Tim Bennett says the new market will fund independent investment research and listed companies will pay for market-making services to encourage liquidity.

The listing rules will also be much simpler and clearer, taking up less than 30 pages compared with more than 100 for the AX. The disclosure regime will be like a “bright-line” test, requiring public announcements if a certain event occurs. The focus will be more on the underlying drivers of business performance rather than just profit and

Investment banker Rob Cameron says just transforming the existing AX might have been an option, instead of establishing a whole new platform, “but I think the stock exchange is making a pretty astute judgment that ‘no, we need a new brand, a new market with a new set of rules’”.


For investors, the NZX wants to define that the new market, with its cohort of smaller, higher-growth companies, will be riskier than larger, more mature businesses. Cameron expects products to emerge that will allow retail investors to be exposed to a group of growth companies, reducing risk compared with having to choose just one or two.

“These are earlier-stage companies with different growth trajectories – obviously there are potentially higher returns but also potentially lower returns than an investment you would make in a large established business on the main board,” says Bennett.

For Auckland investor Aaron Bhatnagar, whose family interests are stakeholders in Pushpay, Results.com and Dairy Farms NZ, which are likely to come to the market in the next year, liquidity and the availability of capital for high-growth businesses is good news.

“One of the issues with investing in smaller, high-growth companies is your ability to realise profits along the way, and having liquidity for those shares is very important.”


Investment guide


Vista Group
Sells software for cinema operators and film companies to keep track of their business and analyse trends.

Big sell: Lets multiplex cinema operators track everything from ticket and popcorn sales to head-office costs and is used in 60 countries, processing an estimated 1 billion tickets a year. It has business units that analyse patterns of customer behaviour and marketing campaigns, and sells software for film distributors. Clients include Regal, the world’s biggest cinema exhibitor.

Raising: Up to $40 million in new capital.

Where it goes: Of the new capital, $9.3 million will be spent buying control of film industry software firm MACCS, up to $8.6 million including earn-outs for 100% of data analyser Movio and $2.6 million for funding of Numero, which aggregates box office data. $15.4 million is earmarked for future acquisitions and developments and $3.9 million covers the offer costs.

Existing shareholders: Will sell down their holdings to between 45% and 49%.

Outlook: Pro forma revenue is forecast to climb about 29% to $49.9 million in 2014 and jump again to $61.5 million in 2015, when it expects net profit of $8.1 million. Its prospectus shows positive earnings (on an Ebitda basis) since 2011.

Metro Performance Glass
Auckland-based glass manufacturer seized by its creditors in a debt-for-equity swap in 2012.

Big sell: Metroglass is the New Zealand market leader in the value-added glass processing market, with more than 50% market share, and is twice the size of its nearest competitor. Residential construction and a revival in commercial building is expected to drive growth.

Raising: $244.2 million, selling shares at $1.70 apiece.

Where it goes: All the funds raised, excluding sale costs and a small amount of debt, goes to the current owners, who include Australian private equity firm Crescent Capital, AIO Finance Ireland, JP Morgan, Germany’s WestLB and Bain Capital’s Sankaty Credit Opportunities fund.

Existing shareholders: Will retain 18.5% of the company and senior managers will hold a further 3.8%.

Outlook: Revenue is forecast at $171.9 million in 2015, the third year of growth. Profit is projected to rise to $14.3 million next year, from $8.8 million in 2012.


Sells mobile measuring devices used by architects, builders and engineers and with military applications.

Big sell: You can take a picture of a building with your smartphone and it will tell you the exact dimensions. Technology is licensed to General Electric, which is a shareholder and markets its own branded product. Products were developed with the US Army Corps of Engineers, US intelligence agency developer In-Q-Tel and software companies servicing the electricity utility sector. Has more than 200 electric utility and engineering customers. Says US market alone may be worth NZ$793 million a year.

Raising: At the time of going to print, it was on track to raise $25 million, selling shares at $1.10 apiece.

Where it goes: $23.1 million on sales and marketing, product development, some operational and other costs.

Existing share­holders: Won’t sell down their holdings, which amount to 55% following the offer. Led by Jenny Morel’s No 8 Ventures, with about a fifth of the company, and a who’s who of prominent Wellingtonians.

Outlook: Sales are forecast to jump to about $6.5 million in the 2015 financial year, and to $14.3 million in 2016, from $1.88 million this year. Losses are forecast to rise to $5.8 million in 2016.

Online business-travel booking company.

Big sell:A sophisticated corporate-travel booking and expense-management solution via its cloud-hosted software platforms. It has 6000 existing corporate and government customers and growth aspirations in the US$300 billion Asia-Pacific market, and envisages partnership deals and potential acquisitions.

Raised: $17 million of new capital selling shares at $1.10 apiece.

Where it goes: $11.3 million to fund capital growth and cover IPO costs, $3.4 million to repay bank debt, $2.3 million to repay shareholder loans.

Existing shareholders: Sold about 10.5% of their holdings raising a further $5 million, bringing the total raised to $22 million. Founders Darrin Grafton and Bob Shaw each retained about 20% and have agreed not to sell any more shares till two days after Serko announces its 2016 annual result. All up, the share offer amounted to about 32.6% of the company.

Outlook: Describes itself as a relatively early-stage business. Losses for the next two years, no dividends.

NZX debut: Dropped below IPO price.

Genesis Energy
Largest retailer of electricity and gas.

Big sell: Low cost, geographically diverse hydro-electric power stations at Tongariro, Waikaremoana and Tekapo, plus coal and gas generation at Huntly. It also gets 31% of the oil, gas and LPG produced from the Kupe field.

Raised: $736 million, selling shares at $1.55 apiece.

Existing shareholder: No new capital was raised as the Government sold 49% of the company.

Outlook: Operating revenue is forecast to change little this year, before rising about 6% to $2.17 billion in 2015. Pretax earnings may drop 9.3% this year before climbing 19% in 2015 to $363 million.

NZX debut: The stock initially surged 17% and hasn’t been below $1.75 since listing.

Sells utility and airport management software.

Big sell: The company will be debt-free after the share sale, giving it room to add compatible software or enter new markets. Gentrack sees growth opportunities in New Zealand, Australia and the UK, in markets it says are characterised by “high technical and reputational barriers to entry”. Genesis Energy, Meridian Energy, Mighty River Power, Australia’s Origin Energy and the UK’s Sembcorp Bournemouth Water are among utility customers for its Gentrack Velocity billing product. Airport companies that use its Airport 20/20 management system include Auckland International Airport, Sydney Airport, Hong Kong International Airport and John F Kennedy International Airport.

Raised: $99.1 million, of which $36 million is new capital, at $2.40 a share, at the higher end of the $2 to $2.50 range touted in its prospectus.

Where it goes: The $36 million of new capital is being used to repay debt and cover IPO costs.

Existing shareholders: Chairman John Clifford, executive director James Docking and other existing shareholders raised about $63 million selling down their holdings, leaving them with about 43.2% of the company after the sale. Clifford and Docking teamed up to buy the assets, then called Talgentra, in 2012.

Outlook: Gentrack has an implied cash dividend yield of 1.4% to 1.7% for 2014, rising to 4.5%-5.4% in 2015, according to the prospectus. It forecast revenue rising to $40.6 million in 2014 from $40.1 million in 2013, and climbing to $44.7 million in 2015. Net profit would be $3.7 million this year and $9.3 million in 2015.

NZX debut: Rallied from its IPO price and has remained elevated.

Scales Corp
Operates the Mr Apple growing and marketing business that will generate 58% of earnings this year; storage and logistics businesses, including cold storage, liquids storage, and primary produce air and sea freight make up 36% of earnings; and food ingredients are 10% of earnings.

Big sell: Scales will benefit from growth in food exports that is expected to run at 6% a year through 2017, and to the Ministry for Primary Industries target of doubling of primary sector exports by 2025.

Raising: At the time of going to print, it was on track to raise $148.8 million at $1.60 per share.

Where it goes: The $30 million of new capital will repay debt, cover issue costs and provide capital for future expansion.

Existing shareholders: Direct Capital Investments will sell between 59% and 73% of its shares, which currently amount to 84% of the company, raising up to $141.5 million. The Auckland-based private investment firm acquired 79.7% of Scales, with NZ Superannuation Fund and Accident Compensation Corporation as co-investors, in 2011 for $44 million from the receivers of South Canterbury Finance.

Outlook: Scales is projecting an implied cash dividend yield of 5.2%-5.9% in 2014 and 5.8%-6.6% in 2015. It forecasts net profit dipping slightly to $18.5 million this year from $20.4 million in 2013, before recovering to $20.8 million in 2015.


Sells a system that allows transport companies to manage and pay road-user charges and keep track of their fleets.

Expected to raise: $40 million of new capital to fund growth. Expects to list its shares on the NZX main board in mid-August.

Orion Health
Developer of hospital management systems, with clients in 30 countries. Has become a leading global health software business, with average growth of 30% a year, according to its website.

Mobile-payment app developer.

Big sell: Pushpay says its niche, payments made away from points of sale, is underserved and in high demand from both consumers and merchants worldwide. Its app is designed to appeal to everyone and everything from tradespeople to enterprise, non-profits and churches that are attracted to strong security. It has a 10-second payment process and a presence in 28 countries. Although consumers are free to download the app, merchants must be licensed to use Pushpay.

Raised: $14.1 million in two private placements ahead of a compliance listing on the NZX small cap index. No prospectus, although a disclosure statement has been issued to investors in the placement.

Where it goes: To “scale its global expansion strategies, particularly in the USA”.

Existing shareholders: Major holdings subject to lock-up. Christopher & Banks Private Equity, an investment vehicle for the Huljich family, is the largest existing shareholder, followed by UK-based investor David Simpkin and interests associated with founders Eliot Crowther and Christopher Heaslip.

Outlook: Pushpay says transaction volumes are rising 20% month-on-month and annualised payments volume, as at mid-June, exceeded $35 million, up from $17 million in February.

Sharespeak for dummies

Capital markets: Markets where equities and debt can be bought and sold.

Due diligence: Going over every aspect of a company with a fine-toothed comb before investing.

Equities: Shares.

FMA: Financial Markets Authority: the watchdog that regulates debt and equity markets.

Growth or momentum stock: A share in a company that may not be making money yet, but has fast-growing revenue in pursuit of a dominant market position (think Xero).

Institutional investor: A large investment fund employing professional managers, often investing on behalf of pension or insurance providers.

IPO: Initial public offering: A fancy expression for “floating shares on the sharemarket”.

Liquidity: The ability to buy and sell a stock easily, the lifeblood of any market. Illiquid shares tend to trade at a discount because investors can’t confidently get in and out of the stock, should they want or need to. Liquidity makes a stock more attractive.

Market capitalisation: The value of a company based on its current share price. A company with 100 shares on issue, trading at $1 each, would have a “market cap” of $100.

Market-maker: A stockbroking firm or investment funds manager that always offers a price for a share, whether or not anyone wants to buy or sell it. Market-makers help to build liquidity.

NZAX: A secondary board launched in 2003 for low-cost listings, being effectively replaced by a new secondary board for high-growth stocks. Suffered from a lack of liquidity.

NZX: The New Zealand Stock Exchange, which operates the main share trading platforms. The NZX “main board” is for large companies and has more stringent regulation and disclosure requirements than so-called “secondary” boards, which are for smaller companies and growth stocks.

Retail investor: You and me.

Yield stock: A share that investors buy because it pays good dividends, not because they hope for a big capital gain through a rising price.

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