More small- and micro-cap New Zealand companies are dual listing on ASX, many are doing so from their Initial Public Offering (IPO), and sole listings on ASX are increasing,
Also, NZ companies in the information technology and healthcare sectors, in particular, are choosing to dual list on ASX to access Australia’s capital pool and potentially increase liquidity.
These are key findings from an ASX analysis of all NZ listings on ASX. Taken together, the findings show a wider range of NZ companies, by size and sector, are listing on ASX.
Here are six key findings from the analysis:
NZ listings on ASX range from accounting software provider Xero (market capitalisation: $18.8 billion)[i] to several mid-cap and small-cap NZ companies. About a third of NZ companies listed on ASX are capitalised at $100 million or below.[ii]
ASX has a long history of successful capital raisings and listings for early-stage growth companies. Australian investors are known for supporting emerging companies in mining, energy, information technology, biotechnology and other sectors.
Some NZ companies raised less than $5 million through their IPO and ASX listing. Like their Australian counterparts, early-stage NZ companies are raising capital through an IPO on ASX rather than through additional rounds of venture-capital or private-equity finance.
NZ listings on ASX come from a wide range of sectors. By value, the top sector[iii] is utilities. Listings include Mercury NZ (ASX: MCY), Meridian Energy (ASX: MEZ), and Contact Energy (ASX: CEN). Transportation is another source of dual listings on ASX due to Air New Zealand (ASX: AIZ), and Auckland International Airport (ASX: AIA).
By volume of NZ companies listed on ASX, information technology is the top sector, followed closely by healthcare. NZ companies in communication services, consumer staples, consumer discretionary, financials, energy and materials, and other sectors are also represented on ASX.
The information technology and biotechnology sectors in New Zealand have been an expanding source of ASX listings in recent years.
Aroa Biosurgery (ASX: ARX) listed on ASX in 2020 and TruScreen Group (ASX: TRU) listed in 2021. They join NZ healthcare companies that listed on ASX in 2015 or 2016, such as Volpara Health Technologies (ASX: VHT), AFT Pharmaceuticals (ASX: AFP), and Adherium (ASX: ADR).
ASX has had strong growth in technology listings in the past five years. Tech is now the fast-growing sector on ASX, and the top sector by number of IPOs.[iv] More than 30 tech “unicorns” (companies valued at more than $1 billion) are listed on ASX.[v]
In 2020, seven New Zealand companies listed on ASX: Eroad, Aroa Biosurgery, Harmoney Corp (ASX: HMY) Plexure Group, Laybuy Group, New Zealand Oil and Gas (ASX: NZO) , and Happy Valley Nutrition (ASX: HVM). Most of these companies raised capital with their IPO and ASX listing.
ASX has a vibrant IPO market for early-stage growth companies. ASX is one of the world’s most active exchanges by listings volumes with more than 120 new listings each year.[vi]
Increasingly, NZ companies are using the strength of the ASX IPO market to raise equity capital – and the IPO process to begin life as a listed entity as a dual- or sole-listed company on ASX.
More NZ companies are choosing a sole listing on ASX, rather than a dual listing on NZX and ASX. For some, a sole listing on ASX is more efficient and cost-effective.
Eighteen of 63 NZ companies listed on ASX now have a sole listing. They include recent listings such as Aroa Biosurgery and Laybuy Group. In early 2018, Xero transitioned to a sole listing on ASX, after being dual-listed on NZX and ASX.
Most NZ companies sole listed on ASX are capitalised below $100 million, and from the information technology, biotechnology, and materials sectors.[vii]
Many NZ companies listed on NZX choose a secondary listing on ASX as they grow. This provides exposure to a larger capital base in Australia, enhanced exposure to global capital markets, and the potential for higher share liquidity and index inclusion.
Between 2010 and 2019, 15 NZX-listed companies undertook a secondary listing on ASX[viii]. Some used the ASX’s NZ Foreign Exempt listing category, which streamlines the dual-listing process for NZ companies.
Notes and references
[i] Market capitalisation at May 25, 2021. Source: Morningstar
[ii] At May 25, 2021.
[iii] Based on GIC Sector classification
[iv] In 2019. Source: Bloomberg.
[v] At 30 June 2020.
[vi] Annual average of new listings on ASX from 2014 to 2020.
[vii] At May 25. 2021.
[viii] ASX internal data