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Capital Markets 2029 - vision and growth agenda for capital markets in NZ

September 10, 2019

Contacts

Partners Michael Pollard, James Hawes, Don Holborow, Andrew Matthews, Cath Shirley-Brown

M&A and capital markets

The Capital Markets 2029 Steering Committee yesterday released its 10 year vision and plan to promote stronger capital markets for all New Zealanders (Growing New Zealand’s Capital Markets 2029). The report’s premise is that New Zealand (and New Zealanders) will benefit if the capital markets achieve more than they do currently.    

A series of recommendations are made, aimed at addressing the following key issues:

  • There are significant aspects of the productive economy not reflected in the public capital markets, which  could / should be (eg, infrastructure).

  • Much more could be made of KiwiSaver to encourage active participation in the saving / investment economy.

  • Private markets do not serve the full range of NZ investors (particularly retail investors).

  • Regulation needs to work better (so that the right balance is struck between protecting investors and enabling investment).  

  • More education of the public is required about savings and investments (so that investors are generally more informed about the value of saving and investment, the issues involved).

Some of the recommendations include:

  • KiwiSaver:  Allowing KiwiSaver members greater freedom to direct their investments. Re-instating the $1,000 kickstart payment for those over 18. Providing for a greater range of contribution levels for KiwiSaver.

  • Regulation:  Simplify disclosure requirements for regulated offers. Remove requirement for prospective financial information on IPOs. Review continuous disclosure liability settings to remove the “no fault” regime. Establish a centralised (including trans-Tasman) process for AML compliance. Align liability settings across public and private capital markets.

  • Infrastructure:  Greater flexibility to allow local bodies to access public capital markets to fund infrastructure projects. Review Crown contribution to capital markets (expansion of mixed ownership model programme).

  • Awareness:  Greater promotion and education of various pathways to accessing the listed market (beyond an IPO). More education of New Zealand businesses about listing options.

The number and nature of the recommendations reflects that there is no single magic solution to the issues identified. Recommended solutions require action mainly from Government, but also from regulators and industry. 

The Steering Committee has sought responses to the key stakeholders involved in the recommendations (MBIE, NZX, FMA, industry). 

Contributors charlotte.mcgloughlin@simpsongrierson.com