The New Zealand (NZ) Government’s plan to create a more strategic approach to freight and supply-chain systems is a crucial development for that industry. It could also encourage Trans-Tasman transport companies to raise capital through an ASX listing.
In April 2022, the NZ Government sought comment on its freight and supply-chain issues paper. The consultation process received 83 submissions and the NZ Government is now developing a draft strategy and further engaging with industry.
Some industry stakeholders said the NZ freight and supply-chain system was too fragmented and inefficient. Road freight, which accounts for about 93% of freight volumes in NZ, was particularly fragmented due to many small operators.
The NZ Government noted that productivity in NZ freight has been declining for two decades. [i] Significant investment from government and the private sector was needed to drive higher rates of innovation and productivity in the NZ transport sector.
Pressure is building. Like other developed nations, NZ must prepare its freight and supply-chain system for decarbonisation. Climate change, extreme weather events, population growth and changing consumption patterns are challenges.
For the private sector, the answer is partly about scale and capital. That is, greater consolidation of a fragmented transport sector and companies raising capital to invest in supply-chain innovations. For some, that could involve an exchange listing.
“The NZ Government is doing excellent work on the freight and supply-chain strategy,” says Blair Harrison, Head of New Zealand Listings at ASX. “NZ has never had such a comprehensive freight review. Like most countries, NZ faces challenges in transportation, amid climate change.”
Harrison says there are similarities between NZ and Australia regarding freight and supply chains. “As is the case in Australia, New Zealand’s freight sector is quite fragmented with many family-owned businesses that need capital to reinvest and grow – and may have succession issues as founders retire and rely on their children to run the business.”
He says long-term government planning and investment in the NZ freight sector will give the private sector more confidence to invest. “New Zealand is potentially on the cusp of a stronger period of investment in freight over the coming decade. There are many challenges, but equally many opportunities to grow the sector.”
ASX can aid this transformation, says Harrison. “Australia has the world’s fifth-largest pool of retirement savings. Australian superannuation funds have a long record of investing in infrastructure and transport companies.”
Harrison adds: “Australian fund managers continue to show support for NZ companies that dual list on ASX or sole list on ASX. Small-cap fund managers, in particular, have shown they will invest in small-cap NZ companies that list on ASX.”
ASX suits NZ freight companies that seek capital for Trans-Tasman growth, says Harrison. “ASX continues to attract more NZ companies, including those currently listed, that want access to Australian and global capital, potentially higher share liquidity and index inclusion. For many companies, being listed in Australia and NZ makes sense.”
New Zealand companies on ASX
Sixty-five NZ companies have a sole or dual listing on ASX [ii], equating to about a quarter of all international listings in Australia.
That includes Air New Zealand (ASX: AIZ) and Auckland International Airport (ASX: AIA), both dual listed on ASX and NZX. Several smaller NZ logistics-related companies have joined them on ASX in recent years.
In September 2020, EROAD (ASX: ERD), an NZ transport-technology company, dual listed on ASX through the NZ Foreign Exempt rule. This means EROAD does not have to comply with the full suite of ASX Listing Rules, or benchmark its governance against the ASX Corporate Governance Council’s Principles & Recommendations.
In May 2021, DGL Group (ASX: DGL), a specialist chemicals and dangerous goods business, dual listed on ASX and NZX through an Initial Public Offering. The NZ-based company rebuffed offers from private equity to invest in the business [iii].
In July 2022, NZ-based transport group MOVE Logistics Group (ASX: MOV) “… dual listed on ASX through the NZ Foreign Exempt rule. The goal: to attract Australian institutions and position the company for growth. MOVE is featured separately in this issue of ASX On The Board.
Other NZ freight companies could follow them. In September 2022, business press in Australia speculated about other Initial Public Offerings involving NZ freight companies [iv].
Vibrant transport sector
NZ freight companies that choose to list in Australia will join 22 transport companies on ASX. They range from large companies such as Transurban Group (ASX: TCL) and Qantas Airways (ASX: QAN), to microcap companies. About half of ASX transport stocks are capitalised at less than $500 million. [v]
Dalrymple Bay Infrastructure (ASX: DBI) was one of the largest supply-chain-related IPOs on ASX in recent years. In December 2020, Dalrymple Bay, owner of a coal terminal in North Queensland, listed on ASX in a $1.28 billion offer.
Australia transport companies, too, are raising capital through an ASX listing. In July 2021, Silk Logistics Holdings (ASX: SLH) raised $70 million through an ASX listing, capitalising it at $151 million. Silk is featured in this issue of ASX On The Board.
In June 2021, Camplify Holdings (ASX: CHL) raised $11.5 million and listed on ASX. Camplify’s platform allows owners of campervans and motorhomes to rent their vehicles, and it owns one of Australia’s largest recreational-vehicle fleets.
In October 2022, Camplify agreed to acquire PaulCamper, the operator of Germany’s leading peer-to-peer RV rental marketplace. To fund its growth initiatives, Camplify will raise $8.5 million via a two-tranche placement. A further capped $2 million will be offered to shareholders via a Share Purchase Plan.
That followed Camplify’s acquisiton in May 2022 of Mighway and SHAREaCamper from Tourism Holdings. The acquisition of these peer-to-peer operators in NZ was funded through an all-scrip deal worth up to $7.37 million.
Harrison says ASX’s exposure to freight and supply-chain companies extends beyond the transportation industry group on ASX. “Some of the most successful supply-chain-related listings on ASX have been software-as-a-service companies.” One of them, WiseTech Global (ASX: WTC), is featured in a video in this issue of ASX On The Board.
“There’s quite a diverse group of transport and logistics-related companies on ASX,” says Harrison. “And a large pool of retirement savings that understands the importance of investing in transport-related assets in Australia and New Zealand – and the opportunities.”
Blair Harrison,
Head of New Zealand Listings at ASX
[i] Based on Stats NZ data.
[ii] At September 2022.
(iii) DGL is no longer dual listed, dropping its NZX listing on 28 June 2022.
[iv] The Australian, “Investment banks to pitch for role in IPO of Mondiale VGL”. 2 September 2022.
[v] At 5 October 2022
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