First IPO under the new FMCA regime

by Hannah Norton16 Sep 2015
Minter Ellison Rudd Watts has been advising CBL Corporation Ltd in preparation for it’s dual-listing on the NZX Main board and ASX.

The company’s initial public offering (IPO) of its ordinary shares is expected to raise between $123 million and $132 million, based on an indicative price range of $1.45 to $1.85 per share and an implied market capitalisation of between $324 million and $389 million for the company.

Auckland-based CBL, a provider of credit surety and financial risk insurance, registered its PDS with regulators on both sides of the Tasman last week.

It will be the first IPO under the new Financial Markets Conduct Act regime, says Silvana Schenone, who led the transaction team at Minter Ellison Rudd Watts.

“There were no precedents to follow. All parties needed to depart from their old ‘ways’ of doing things,” Schenone told NZLawyer.

“Under the old regime, you could get away with a lengthy set of documents and fairly generic risks sections.

“Some would say ‘the kitchen sink’ approach.”

The CBL Product Disclosure Statement (PDS) is 52 pages, as opposed to the 200 or more pages of offer documents under the old law, and contains very specific risks relevant to investors, she said.

“Also the risks section is now in a table format, including the risk, the mitigation strategies around that risk, and a subjective – [but] very carefully considered - assessment of the likelihood and impact of each risk if it were to occur.”

The team worked closely with the regulators to address all the requirements of the new legislation in a concise and clear way, Schenone said.

“There were a number of challenges to overcome throughout the process, but our ECM team worked closely with our leading Financial Services team of experts to achieve this milestone in New Zealand’s equity capital market.”

Schenone said she “definitely” prefers the new approach.

“It requires the product disclosure statements to be clear, concise and effective.”

Other material information goes into an online register that investors can easily access, she said.

“The new regime also allows more flexibility around advertising during an IPO.

“In simple terms, the new regime is aiming at ensuring that all material information is provided to investors without so much fluff around it that it becomes confusing.”

The regime still needs a bit of time to mature in the market, she said.

“But we see this first IPO as a great first step in the right direction.”

Minter Ellison Rudd Watts worked with Minter Ellison in Australia on the deal.

“This unique trans-Tasman relationship has saved our client time and money. We’re pleased that this relationship made it easier for them to achieve their goal.”

As more than 90 per cent of CBL’s operations are outside of NZ, this has also meant a lot of liaison with lawyers across Minter Ellison Rudd Watts’ international network, she said.

“There have been quite a few late night calls with people in Europe and South America, but the collaboration has been fantastic, we couldn’t have asked for a better process, client or team to get to this milestone.”

The project team partners from Minter Ellison Rudd Watts consisted of Silvana Schenone, Cathy Quinn, Lloyd Kavanagh and Andrew Horne.

Fortune Manning, Cameron Mackenna in London, Rigby Cooke in Australia and other firms in other jurisdictions provided due diligence support with respect to offshore activities of the group.