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New Zealand

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

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