Recent initial public offerings (IPOs) are a sign of
confidence businesses have in their ability to raise money
and enter the capital markets, Forsyth Barr broker Haley Van
Leeuwen said yesterday.
Scales Corp, which was once part of the South Canterbury
Finance stable of companies, yesterday announced it was
considering an IPO and listing on the main board of the NZX.
Recently, Gentrack and Serko had announced capital raisings
and Hirepool, which was taken into private equity after it
merged with HireQuip, is said to be considering a listing
later in the year.
HireQuip, which was headquartered in Dunedin, was previously
Mrs Van Leeuwen said four years ago the current level of
confidence in IPOs would not have been seen.
''Investors were really just interested in simple bonds, term
deposits or the listed property sector.
''It is also good for the NZX to increase the depth of listed
companies and expand the availability of stocks.''
In particular, the technology sector was a ''hotly
contested'' area of investment internationally and was an
area New Zealand seemed to excel at in terms of its ability
to innovate and create, she said.
Last year two technology stocks - Wynyard and SLI Systems -
listed on the market and were met by a relative confidence by
''I think one of the many challenges for these types of
companies is the market tends to take a very short-term view
on performance and if earnings or profit announcements
slightly disappoint, this can have devastating effects on the
From an adviser's point of view, when attending broker
presentations, Mrs Van Leeuwen wanted to have confidence in
the forecast numbers in investment statements and know she
was entering into a sound stock bidding process when it came
time to acquire stock for clients.
It was also important to realise some of those companies
would not suit more conservative investors, nor necessarily,
those heavily reliant on income.
However, they would present opportunities for those clients
who were growth investors and had a longer investment time
horizon, she said.
Scales Corp is currently 84%-owned by private equity investor
Direct Capital, through its Direct Capital IV and Pohutukawa
II funds, along with co-investment management partners the
New Zealand Superannuation Fund and ACC.
The balance was held by senior management team members and
400 external investors.
Scales said in a media statement the proposed offer would be
through the sale of existing shares, to the extent any of the
current shareholders elected to sell the shares they held,
and the issue of new shares by the company.
Direct Capital intended selling down a portion of its
shareholding but wanted to retain a cornerstone position.
A prospectus was expected to be available mid-June and a
listing was likely late next month.
Earlier, Scales reported a lift in reported profit by 20% to
$20.4 million in the year ended December 2013.
The company's total revenue increased 17.2% on 2012 to $278.1
million, with apple volumes and prices the single largest
The company, one of New Zealand's oldest, is involved in
horticulture and primary-sector processing, export and
It was founded in 1897 as a shipping business by George
Herbert Scales and employs 400 staff throughout New Zealand.
At a glance
• Scales Corp to list in July. Involved in horticulture,
storage and logistics, and food ingredients. Amount to be
raised from investors not specified.
• Gentrack to list on June 25. Specialist utility and airport
software solutions provider, seeking $101.8 million from
• Serko to list on June 24. Cloud-based technology company
seeking $22 million through $17 million of new shares and a
further $5 million of shares from existing shareholders.
• GeoOp listed in October last year. Its software allows
small businesses to manage their workforces. It raised $10
million to fund its global growth.
• Hirepool likely to soon announce an IPO. It is New
Zealand's largest equipment rental company. The company would
have a market capitalisation of $300 million after listing.