This year is likely to be another positive year for capital markets lawyers, despite some early uncertainty emerging in economic crystal ball gazing.
The 2014 calendar year saw an impressive 12 mainboard listings and total IPO activity worth $6.6bn. The NZX
50 Index finished 16.7% up last year, with total market capitalization to GDP rising from 37.8% to 41.1%.
partner Tim Tubman, who advised Arvida Group on the last $80m IPO to get over the line in 2014, said 2015 looked positive.
“The story of last year was that the capital markets drowned out the rest of the market; there was quite good M&A activity, but you didn’t hear much about it. The public market provided a strong contender for exiting assets.”
“What people may see this year is a return to normality, with more M&A activity; I don’t see that detracting from the ECM story, which will still be strong, but the market will have a bit more of a holistic balance to it.”
Tubman said continued small cap raisings from technology companies were likely, with about half the listings in 2014 coming from this sector.
Likewise, companies with exposure to the ageing demographic - such as 2014’s Arvida and Somerset listings – would be prime contenders.
There are questions over the quality of assets that may eventually come to market his year, with 2014 having seen many of the ‘best’ assets go.
“The key is always making sure something doesn’t take the wind out of the sales – if something fails, it could put the hogwash on everything,” he said.
Arvida is also likely to be the last deal under the Securities Act regime, with this year seeing the fully-fledged introduction of the Financial Markets Conduct Act. Chapman Tripp was encouraging its clients to use the new regime, and was already working on a listing for the first quarter.
Tubman said the laws meant more succinct, shorter and clearer disclosure documentation, and created more opportunities for corporates in raising funds not only in IPOs but facilitated cost-effective secondary raisings.