The IPO market of New Zealand saw a slowdown in its activities with no new companies onboarded with the NZX for listing in the year 2018. However, some momentum was seen in the IPO market of New Zealand in the year 2019 with multiple IPO listings including Cannasouth Limited and an IPO of Napier Ports and other and other proposed listings in excess of NZD 50 million in the pipeline for the second half of the year.
The starting of the year 2019 saw encouraging interest from the existing as well as prospective equity, fund and debt issuers looking to take advantage of the enhanced rule settings, particularly in the lately introduced fund and wholesale debt markets as there was an active extension of the available product set.
In the third quarter of the year 2019, NZX completed 11 listings since June 2019, where
- Launch of eight new ETFs (Exchange Traded Funds) of Smartshares with iShares by BlackRock,
- Listing of Private Land and Property Fund (PLP) in September,
- Two equity IPOs with
- Cannasouth (CBD) an early-stage business raising capital for growth, and
- Napier Port Holdings (NPH) listing at the end of August – raising additional capital and freeing up equity for investment in another Hawke’s Bay regional infrastructure.
These listings offered the Kiwi investors with a wide range of investment choices, and the market continues to be utilised effectively to support secondary capital raising by existing issuers across equity, debt and funds.
Till the third quarter of the year 2019, around $12 billion had been listed on NZX’s markets, with Metlifecare’s $100 million debt listing and was to start trading on 1 October.
Let us draw our focus on the IPO listings on NZX during the year 2019.
Based in the agricultural heartland of New Zealand, Cannasouth Limited (NZX:CBD) operates with a goal to develop next-generation cannabinoid therapeutics to support patient’s health outcomes and improve their quality of life. In pursuit of this aim, the Company has established a state-of-the-art laboratories, research and cultivation facilities.
On 27 May 2019, Cannasouth announced its intention to raise a minimum of $5 million through the issue of 10 million new ordinary shares and a maximum of $10 million through the issue of 20 million new ordinary shares) by way of an IPO on NZX.
The IPO comprised of:
- A Priority Pool of $5m, which was only open to those investors who have been invited by Cannasouth to participate in the Priority Offer
- A General Offer of $5m, which was open to all investors that reside in New Zealand
Importantly, the Cannasouth listing was the first equity IPO of the year 2019 and is the only publicly listed medicinal cannabis company in New Zealand in an industry, which is in its infancy in the country.
Cannasouth was keen to undergo listing as an opportunity to aid development and growth while also offering investors with access to an early-stage growth opportunity.
Since its listing in 2019, Cannasouth has solidified its position as a leader in the medicinal cannabis industry in New Zealand and is now poised to accelerate its vertical integration strategy of ‘seed to sale’ as the country’s regulatory framework is undergoing a transformation.
The release of the Government’s medicinal cannabis regulations in December 2019 was a major boost to the confidence of the industry, doctors as well as patients.
Some of the highlights for Cannasouth since listing on the NZX are as follows:
- Secured significant Research & Development funding from Callaghan Innovation for studies into neuropathic pain/drug discovery, and drug delivery system/ optimisation technology;
- Entered into a 50:50 cultivation joint venture (Cannasouth Cultivation Limited), secured resource consent and commenced construction of a world-class, scalable, energy-efficient controlled atmosphere greenhouse cultivation facility;
- Successfully harvested the first three crops of medicinal research cannabis from the Company’s specialist growing facility in the Waikato;
- Expanded with the acquisition of a 60% stake in Midwest Pharmaceutics NZ Limited which is a Hastings-based manufacturing and packing facility specialising in the manufacture, re-packing and wholesale supply of pharmaceutical raw materials and the manufacture of dietary supplements and herbal extracts.
On 29 April 2020, CBD stock last traded at NZ$0.430, up by 2.38% and has a market capitalisation of NZ$46.93 million.
Napier Port Listing
In July 2019, Napier Port Holdings Limited (NZX:NPH) introduced its partial initial public offer (IPO) of a 45% stake in the Company to raise $204.3 million to $234.0 million at a price of $2.60 per share by offering 90 million shares.
The Company had sought to utilise $110.2 million to
- Repay the existing debt of the Port’s and
- Provide capacity for the Port to fund a long-term investment programme, including the construction of a new multi-purpose wharf, 6 Wharf
Further, the remaining capital raised through the IPO was expected to
- Enable the Port’s owner, Hawke’s Bay Regional Council, to realise a portion of its investment in the Port
- Provide funding for interest-free limited recourse loans to Eligible Port Employees to buy shares in the Port and meet the costs associated with the IPO
The day 20 August 2019 marked the successful completion of its $234 million initial public offer (IPO) for Napier Port which saw strong demand from the people, iwi, its community and from investors.
According to the Company,
- 20% of the shares on offer were allocated as priority entitlements under the IPO to the port employees, residents, non-resident ratepayers and iwi
- Nearly 90% of the 7,591 applicants in the priority offer were granted for their application in full, with only those who requested over $10,000 of shares having their applications scaled
On 29 April 2020, NPH stock closed at a price of $3.17, down by 0.94%.