Mini stockmarket aimed at capital-hungry SMEs
Small businesses could gain access to much-needed capital through a proposed stock market designed specifically for them, Business NZ head Phil O'Reilly says.
NZX plans to launch a new market to provide small-to-medium-sized enterprises (SMEs) with an easier, lower-cost alternative to accessing investor capital.
The yet-to-be-named market was aimed at businesses with an expected market capitalisation of between $10 million and $100m.
The market would reduce the costs and complexity associated with listing, with streamlined regulatory requirements and simpler, template-based rules and procedures.
O'Reilly said small businesses needed access to more capital to fund growth.
The new market was "very exciting in principle" but it had always been a challenge to get SMEs to list.
"Small businesses have been very wary of listing because of the cost of doing so and the compliance [requirements]."
A new market would need to strike a balance between making the listing process easier and cheaper while maintaining a high level of compliance and investor protection, he said.
But as long as investors were secure and standards were met it made sense to have a different compliance model for small businesses, O'Reilly said.
"Treating a $10 million business like Fletcher Building is simply ridiculous."
O'Reilly hoped the market would also encourage business owners to give up full control of their company in return for access to equity finance.
The proposed market would also give investors access to businesses that were in the earlier stages of development.
NZX spokeswoman Kate McLaughlin said the market would not immediately replace the existing NZX Alternative Market (NZAX).