As of 12 June, companies launching an Initial Public Offering (IPO) in New Zealand will no longer have to provide prospective financial information (PFI) - considered by NZX to be one of the most difficult and expensive requirements for listing.

According to NZX, the requirement for PFI has contributed to companies listing on exchanges that don’t require PFI. The change is aimed at making New Zealand’s capital markets more competitive and better aligning with Australian requirements. However, while this change removes a barrier to IPO listing, it merely scratches the surface of New Zealand's capital markets challenges.

The global context

New Zealand has had very few IPOs in recent years. This IPO drought reflects broader international headwinds. Global IPO numbers dropped around 10% in 2024, with a corresponding decrease in IPO proceeds. India continues to see strong IPO activity, while in the US the market is bouncing back following the election. European IPO numbers remain subdued.

“Economic uncertainty, rising interest rates, and greater availability of private equity have all contributed to the decrease in IPOs,” says Corporate Partner, James Hawes. "New Zealand is not alone in experiencing a downturn. Companies are increasingly favouring private equity, although we have also seen a slowdown there due to economic conditions. Globally, private equity firms have amassed significant ‘dry powder’, estimated at USD 3.7 trillion, making them a compelling alternative to public markets.”

Regulatory hurdles 

Despite the recent changes, regulatory complexity and compliance costs continue to pose significant challenges. But regulatory barriers go beyond PFI. From climate disclosures to ongoing listing obligations, companies face a web of compliance hurdles that can deter public listings altogether. Many companies find the compliance requirements for listing on the NZX onerous compared to Australia and other markets, particularly with the recent introduction of the Climate-related Disclosures regime.

While robust regulation is essential to protect shareholders and market integrity, regulation should not be unduly restrictive. Striking the right balance between investor protection and market efficiency is critical to improving IPO activity, otherwise, it only increases the appeal of private equity.

Director liability: The elephant in the room

Another significant deterrent for companies contemplating IPOs is director liability. The high-profile CBL, Intueri Education Group, and Feltex litigation, which saw directors sued personally after company collapses post-IPO, continue to cast a long shadow over the market.

The introduction of the Climate-Related Disclosures regime has heightened director responsibilities and potential exposure to liability. Directors are now required to ensure climate-related financial disclosures are accurate and compliant with evolving regulatory standards. This additional layer of accountability may further discourage potential directors from stepping into leadership roles in publicly listed companies. The Government is planning to re-examine director liability under the Climate-Related Disclosures regime as part of its capital markets reform.

Litigation Partner Nina Blomfield says that “Reviewing director liability settings to provide greater clarity and protection is an essential next step to foster a more conducive IPO environment. Without reform, director liability will remain a structural deterrent, not just for IPOs, but for attracting top talent to listed companies.”

More work to do

While the recent PFI change is a welcome step, it won’t be enough to reinvigorate New Zealand’s public markets. The reality is that for many companies, private equity remains far more attractive: higher valuation multiples, fewer compliance obligations, and less risk of personal liability for directors.

If the Government wants to make IPOs a genuinely competitive alternative to private capital, we need serious structural reform. Some of the reforms we would like to see include:

• Director liability reform: Introduce a safe harbour regime for directors who act honestly and reasonably in approving IPO disclosure documents, similar to Australia. This would reduce the chilling effect of personal liability on directors and encourage more talent to lead listed companies.
• Simplified disclosure for smaller issuers: Create a proportionate disclosure regime for smaller or mid-sized companies to lower compliance costs without compromising investor protection. This could include tiered listing rules or scaled-down climate reporting requirements.
• Streamlined dual listing pathways: Make it easier for NZ companies to dual-list with Australia and other jurisdictions, reducing compliance duplication and increasing access to larger pools of capital.

Budget 2025 focused heavily on attracting global capital, businesses and talent into New Zealand to help drive long-term economic growth. With global capital increasingly mobile and private markets flush with dry powder, the window for revitalising New Zealand’s public markets may not stay open for long.

The recently announced Virgin Australia IPO is a timely reminder that public markets are still a powerful tool for raising capital and that momentum can return quickly under the right conditions. With the right reforms, New Zealand could capitalise on that momentum and re-establish IPOs as a viable and attractive pathway for growing Kiwi businesses.

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