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Screenshot of a breaking news alert e-mail from Q2 2017
The Financial Markets Authority (FMA) has reported that the first listing this week on the NXT market sparks a new era of innovative capital raising in New Zealand.
The NXT market provides an alternative platform for smaller and mid-sized New Zealand companies to raise capital. The NXT market allows for reduced complexity with a set of simplified listing rules and a new approach to disclosure.
APAC focused firms can attract Chinese investors wishing to influence share price
LeapRate recently conducted research in China, which outlined that investors in the Asia Pacific region do not find the purchasing of stock of established companies on large venues and then sit back to wait and see if the stock value goes up or down according to a corporate performance which is out of their hands.
Instead, Chinese investors look for small to medium sized pre-IPO companies, buy up stock in their initial listing and then work hard to influence the price of the stock themselves. In short, Chinese investors want to be able to influence the direction of their investment, therefore this particular venue is good news for small to medium sized privately owned FX firms with a Chinese audience.
New Zealand courts high growth firms
“Providing high performing capital markets that support investment, growth and jobs is a key initiative proposed in the government’s business growth agenda. The new NXT market is an innovative step that helps to meet the dynamics of the New Zealand economy, which has a significant proportion of small and medium-sized businesses,” said Rob Everett, FMA chief executive.
NXT is a market for small to mid-sized businesses with an expected market capitalisation of $10-100M and a minimum capital-raising of $5M for those seeking additional capital.
Mr Everett said there are now effectively three tiers of capital-raising platforms in New Zealand.
“Enabling equity crowd funding and the NXT growth market, to complement the NZX Main Board, recognises the different levels of business development and sizes of enterprise within our economy. We will be working with the industry to ensure investors understand the different disclosure rules for each of these markets.”
The NXT market has been established under the Securities Markets Act 1988 as a response to the recommendations from the Capital Markets Taskforce. This taskforce noted that New Zealand has limited capital raising opportunities for small and medium-sized businesses.
Key features of the NXT market include simplified listing rules and documents as well as template-based procedures a periodic disclosure environment where companies provide quarterly business updates to the market and immediately notify the market if one of a pre-determined set of events occurs providing indications to investors of the underlying performance of the business through key operating milestones and associated targets, updated on an annual basis, instead of prospective financial information by forecasting support from NXT Advisors, both before and after listing on NXT.
Companies that will list on the NXT are required to make clear and effective disclosure to potential investors that the risks of investing in companies listed on NXT may be higher than investing in other companies.
For the official announcement from the New Zealand FMA, click here.