In June, IFLR (page 71) outlined the details of the New Capital
Market (NCM), an initiative designed by the New Zealand Stock
Exchange (NZSE) to make it easier for small and medium-sized
companies to raise capital for new growth-oriented business.
Three companies have listed on the NCM since its 10 March
launch. One of these companies is due to switch to the main board
of the stock exchange by the time of publication, having completed
its key transaction.
At the time of writing, a fourth company has a share offer open.
The stock exchange is predicting 10 listings on the NCM by the end
of the year and 30 by next April.
NZSE legal and surveillance manager Philippe Leloir has been
reported as saying that the NCM is attracting interest from a
diverse range of companies. Earlier predictions by brokers that the
NCM would be dominated by high-tech companies have not
eventuated.
Because NCM companies cannot start any form of business prior to
listing, investors have no access to any financial information
about the company. The companies rely on the quality of their
directors and the reputation of their organizing broker to promote
themselves to investors. As such, investing in the NCM is highly
speculative, although a number of safeguards have been established
to protect NCM companies' shareholders from abuse by promoters
while that company is listed on the NCM (see June 2000
article).
The June article identified the key ingredients to the success
of the NCM as being the attitude of those business people who seek
to exploit the opportunities, and the increase in investor faith
from early NCM companies that achieve outstanding success. The
stock exchange believes that as soon as they list about 10
companies, people will see the NCM as a credible market.
James Aitken and Hamish Walker