Firm advises on new market’s first listing

by Hannah Norton19 Jun 2015
It was a case of navigating new waters for one top-tier New Zealand firm, who advised the first company to list on NZX’s new securities market NXT.

Chapman Tripp – lead by partner Roger Wallis, assisted by senior associate Joshua Pringle and solicitor Briar Malpas – advised G3 Group Limited (G3) on its listing on the market, which went live yesterday.

NXT was designed for small and medium-sized businesses with aspirations to grow and was targeted at business with a value range between $10m and $100m, Wallis said. G3 has a current market capitalisation of $40m.

“It was literally the first company listed on that new market, so there was a bit of having to work through with NZX how to interpret some of their rules, which are different from some of the rules that apply to the main stock market, and some of their processes which are a little bit different, so it had quite a lot of novelty in that respect,” he said. 

“It’s also the first time that there’s been a document published in relation to this market in terms of an initial disclosure document that closely tracks the new form of disclosure document for listings under the new Financial Markets Conduct Act.

“So we were effectively the first published version of an equity-listed company closely tracking the new requirements for much clearer, concise and effective disclosure.”

That required working through, with some care, the new regulations around how those documents are constructed, Wallis said.

“I would hope that it encourages a new class of companies looking to grow and raise capital, and look seriously at that as in option.

“It’s got some distinct differences, compared to the main stock exchange market – it’s got its own brand profiling; it’s designed to foster disclosure around companies that are growing quickly by drawing out simplified ways  for disclosing how those companies are performing compared to the larger market; it’s got some support to try and make the market a success; it’s got a contracted market maker – someone who is required to trade in the market every day to assist other shareholders and ensure their shares are being bought and sold.

“One of the features of the current alternative market is that there can often be no trading at all because it’s hard to match buyers and sellers.”

As part of the annual listing fee, NZX is required to arrange independent periodic research to be published about the performance of the company, Wallis said.

“That’s a little bit different, and that’s again intent to enable some additional profiling to be given to these companies on this market, that they wouldn’t get if they were on the main market. So there’s quite a few design features of the NXT that differ from the existing market that should make it an attractive place for growth companies to at least consider.”

Wallis said the firm had two or three other instructions currently, with clients look at the NXT as an option.

“I would think that by the end of the year there will at least be half a dozen companies listed on this market – it should be a good start for it.”