Despite more challenging international economic conditions and uncertain local market sentiment, there will be an increase in the number of companies considering IPOs, according to the latest report from Chapman Tripp.
The paper, New Zealand Equity Capital Markets: Trends and Insights
, looks at current and future trends and predicts a fairly positive outcome for IPOs in 2016.
However, this increase will not return the total number of IPOs to 2013 and 2014 levels, Rachel Dunne, Partner in Chapman Tripp’s Commercial and Corporate Team, told NZ Lawyer. This will occur for three reasons, she added.
“We are aware of a number of companies that are exploring an IPO or had plans to IPO last year and parked them for various reasons that may come back to the IPO market in 2016.”
Dunne also said that while there were only three IPOs last year, the NZX also experienced a 20.1% year-on-year increase in capital raised. This shows that there is still healthy demand for investment opportunities in New Zealand’s capital markets.
Finally, “although 2016 has shown volatility in international markets, the NZX continues to demonstrate resilience and the current reporting season is delivering solid results,” she added.
For local legal firms, one strategy that Dunne recommends is completely throwing out the rule book and practices used for transactions under the now repealed Securities Act.
“Law firms that can demonstrate innovative approaches to assist their clients to raise capital will add real value through enabling better engagement with retail investors,” she said.
In turn, this should encourage greater participation in IPOs as well as stimulate heightened interest in capital markets in general.