In June 2022, DGL Group (ASX: DGL), a chemical manufacturing and distribution company, moved from a dual to a sole listing on ASX. DGL originally dual listed on ASX and NZX through a successful $100 million IPO in May 2021.

But in a May 2022 announcement, DGL said its Board believed that offering an NZ-based trading platform was of “little or no value to DGL or its shareholders” and that there was “no benefit from continuing to remain listed on NZX”.

At the time of that announcement, New Zealanders owned only 2.38% of DGL shares. “The NZ listing made no sense,” says DGL CEO Simon Henry. “On some days, less than 1% of DGL share turnover came from NZ.”

DGL is part of a growing trend of NZ companies choosing to sole list on ASX rather than dual list on NZX and ASX.

Henry says the costs of dual listing outweighed the benefits. “Having to release company announcements across two markets is hard work. There are considerable legal complexities with dual listings that companies can underestimate. DGL will save time and money by moving to a sole listing on ASX.”

Research coverage was another factor. Since listing, DGL has attracted research from several Australian broking firms. “The NZ brokers never really covered us,” says Henry. Most support we received from analysts was from Australia.”

DGL delisted from NZX in June 2022. “We can now concentrate our efforts through one exchange,” says Henry. “I expect more NZ companies will do the same. There’s not much point being listed on two exchanges if almost all of your liquidity comes through ASX.”

Rationale for sole listings

Eighteen of 65 NZ companies listed on ASX now have a sole rather than a dual listing.[1] Their shares trade only on ASX rather than on multiple exchanges.

Sole listings have become popular with NZ healthcare and information technology companies that target global markets. Emerging companies with global ambition see ASX as a platform to attract investors and raise their international visibility.

In healthcare, Volpara, (ASX: VHT, featured later in this story), Aroa Biosurgery (ASX: ARX), Adherium (ASX: ADR) and Neuren Pharmaceuticals (ASX: NEU) are sole listed on ASX.

Aroa CEO Brian Ward told Listed@ASX in 2021 that the ability to be compared against similar healthcare companies was a factor in the company’s decision to sole list on ASX.

Ward said: “We saw a strong group of early-stage life science companies on ASX. Also, there was a clear peer group of companies for Aroa through Avita Medical (ASX: AVH), Polynovo (ASX: PNV), and Next Science (ASX: NXS). Australian institutional investors in the healthcare sector were familiar with soft-tissue regeneration technology.”

In information technology, Xero (ASX: XRO) and Harmoney (ASX: HMY) are sole listed on ASX.

Xero, the prominent NZ accounting software provider, moved from a dual listing on NZX and ASX to a sole listing on ASX in February 2021. Harmoney, too, moved from a dual to sole listing on ASX in September 2022, citing low liquidity in its shares on NZX.

Blair Harrison, Head of New Zealand Listings at ASX, says dual and sole listings suit different NZ companies. “If the company is well-established in NZ and earns a significant amount of its revenue in that market, a dual listing makes sense. However, if only a fraction of revenue is earned in NZ, a sole listing on ASX should be considered.”

Choosing a dual or sole listing is an important issue for emerging companies. A dual listing provides access to two exchanges and two sets of investors.

The investment mandate of some Australian fund managers requires them to invest only in ASX-listed shares. Thus, a dual listing on ASX provides NZ companies with access to Australian fund managers and the world’s fifth-largest pension pool.

In theory, a dual listing also means the company supports its home exchange and local equity market. But Harrison says companies should choose the exchange that best fits their needs.

“If listing on an overseas exchange means the company has a better chance of raising more capital, increasing its share liquidity and being included in a sharemarket index, then it should list overseas. That company can still be based in its home country and create more jobs and more wealth for people there as it grows.”

There are also technical considerations with dual and sole listings. The main downside with dual listings is exchange listing fees and potentially higher governance, legal, accounting and investor-relations costs. More administration is required.

Reporting is another issue. An NZ-listed company that is dual listed on ASX reports its earnings and dividends in NZ dollars. Then, the dividend is converted to Australian dollars for Australian investors in its ASX Company Announcement.

Time-zone issues and travel are other considerations. Having shares trade on multiple exchanges means dealing with different sets of investors, analysts and fund managers, in different time zones. For emerging companies with fewer internal resources, extra work involved with dual listings can be an issue.

An ASX Foreign Exempt Listing makes it easier for NZ companies that are dual listed on ASX by exempting them from most ASX Listing Rules. But dual listings still have additional compliance, governance and costs compared to sole listings.

Index inclusion is a key consideration. Being dual listed means splitting share liquidity across two exchanges. In some cases, an ASX listing helps NZ companies improve liquidity on their home exchange. But when determining index inclusion, index providers typically only assess the company’s share liquidity on the exchange where the index exists.

Being part of an index, such as the S&P/ASX All Technology Index, is a milestone for listed companies. Index inclusion attracts buying from index funds, such as Exchange Traded Funds, which aids share liquidity. Index inclusion also raises a company’s visibility among active fund managers that benchmark performance against an index.

Harrison says NZ companies need a long-term view when choosing a dual or sole listing. “Companies should think about the next five, 10 years and beyond, and which exchange will best help them achieve their goals. The mistake is judging exchange selection on short-term price performance. Liquidity and market profile take time to build.”

Sole-listed Volpara focuses on global expansion under new leadership

Volpara’s software platform enables personalised breast care. More than 2,000 healthcare facilities worldwide use Volpara’s artificial intelligence-powered software to improve mammogram quality and aid earlier detection of breast cancer.

Since its inception in 2009, Volpara has acquired more than 75 million breast images to enhance its AI algorithms. Volpara technology is used in about 40% of all mammograms in the US alone.

In 2016, Volpara listed on ASX through an Initial Public Offering (IPO), raising $10 million. Volpara was capitalised at A$31.5 million upon listing.

At the time, the company described the ASX listing as a “significant milestone which enables Volpara to accelerate its growth globally”. That has been the case since listing.

Thomas says the ASX listing suited Volpara. “The New Zealand market has a lot of good attributes but it’s small for healthcare companies with global ambition. At the other end, an exchange like NASDAQ was too large for Volpara at this stage of our journey. It would be harder for Volpara to attract investor attention in the US.”

Through Volpara’s investor-relations strategy, Thomas has busily engaged with stockbroking analysts and fund managers to communicate the company’s progress and potential. On some roadshow days, she meets with 10 analysts, back to back.

“I’ve been impressed by the amount of research and homework Australian analysts and fund managers put into these meetings,” says Thomas. “They genuinely want to learn more about Volpara. We are getting good interest from fund managers.”

Thomas explains Volpara’s technology to many male fund managers. “I have invited them to see the mammography machinery, telling them to imagine their hand is a breast. Then the technologist applies compression, to gently squeeze their hand, just as it would compress a breast, to demonstrate the importance of getting compression right in a mammogram, and how Volpara technology enables that. I spend a good amount of time explaining to people how mammograms work.”

Thomas wants to enhance Volpara’s share liquidity by attracting new investors and encouraging more interest from existing shareholders. “The company’s focus on profitability is getting traction in investor meetings,” she says. “Longer term, Volpara has multiple growth options as we expand internationally and into other cancers.”

Thomas is passionate about leading Volpara but might one day return to volunteer nursing when the time is right. In 2001, she spent six months in sub-Saharan Africa at remote medical clinics, including helping orphans in Uganda.

For now, the focus is on using the ASX listing as a platform to attract local and international investors, raise Volpara’s visibility in equity markets and quicken its growth strategy so it can help more women and save lives.