The following opinion piece was featured in The New Zealand Herald.
Three Key Facts
- New Zealand ended 2024 with an 11.4% gain in the NZX 50 Index, driven by cooled inflation and eased interest rates.
- The use of Accelerated Non-Renounceable Entitlement Offers (ANREOs) is aligning New Zealand with Australian market norms, improving shareholder outcomes
- Despite global volatility, New Zealand’s political stability and robust legal framework make it attractive to offshore capital.
After a strong end to 2024, a year marked by significant secondary market activity, fresh global volatility driven by US trade tensions is reshaping how investors look to deploy capital this year.
A renewed focus on defensive assets in “safe-haven” geographies less affected by tariff disruptions will drive M&A activity and investment, and the IPO window will be accessible for high-quality, proven assets as the market recalibrates.
The year of secondary market activity
New Zealand capped off 2024 with an 11.4% gain in the NZX 50Index, demonstrating improved investor sentiment as inflation cooled and interest rates eased. Secondary market activity saw material uplifts, with investors supportive of growth pipelines and balance sheet recapitalisations of large, established New Zealand assets; more than $5 billion has been raised via follow-on offerings over the past 18 months.
Leading many of these processes, Jarden has been part of the shift in how New Zealand companies approach capital raising; most notably, through the use of ANREOs (Accelerated Non-Renounceable Entitlement Offers) in the New Zealand market.
First employed under the new NZX Listing Rules for Heartland Group’s $210 million raise last year, ANREOs enable tighter pricing compared toa renounceable raising structure, a faster execution timetable and more certainty for existing shareholders subscribing for additional shares at a fixed price. Fletcher Building’s September 2024 $700m and Ryman Healthcare’s February 2025 $1b raises – both led by Jarden – incorporated ANREO components following Heartland’s positive market reception.
The growing use of ANREOs brings New Zealand into closer alignment with Australian market norms, with recent activity reflecting a maturing attitude and understanding that the right balance of structural innovation, pricing and fairness can drive better overall shareholder outcomes.
This holds true both during and following equity raise execution. Fletcher Building’s 2024 equity raising delivered strong aftermarket performance, achieving a two-week return of 15% relative to its theoretical ex-rights price (TERP), outperforming the -2.5% median of recent New Zealand Accelerated Renounceable Entitlement Offer (AREO) structures the market was more familiar with. Retail investors were better off under the ANREO structure and received an overall value accretion (even if they didn’t participate), given the potential value of rights in an AREO offer implied by precedents was likely outweighed by trading performance.
Recent secondary market activity has also evidenced a strongappetite for quality growth investment propositions. Auckland Airport’s $1.4billion equity raise last year, the largest follow-on offer in NZX history, wasproject-linked, supporting the construction of a new terminal as part of a$6.6b capital expenditure programme. Strong investor demand reflected theconfidence the market has in Auckland Airport’s long-term strategy.
The trend of NZX/ASX dual listings continues with RymanHealthcare announcing alongside its recent equity raise that it is pursuing asecondary listing on the ASX, geared towards enhancing attractiveness tooffshore capital and liquidity. This trend is particularly relevant forcompanies in sectors where Trans-Tasman investor familiarity is high.
Future New Zealand outlook
Although the Reserve Bank cut the Official Cash Rate by 200basis points from 5.5% in August 2024 to 3.5% on April 9, President DonaldTrump’s protectionist rhetoric and tariff disruptions have brought significant,fresh volatility to capital markets; the US market reached a five-year high involatility (per the VIX Index) in early April, and the S&P 500 is down~4.0% year to date. Following suit, the NZX 50 is down ~4.6% year to date.
Global uncertainty has catalysed a focus on defensive assetsand execution capability, meaning investors will look to transfer capital fromglobally exposed sectors into what are perceived as “safe haven” geographies.In this context, New Zealand, with its relative political stability and robustlegal framework, becomes more attractive to offshore capital.
This outlook is coupled with an expectation that dealmomentum will improve in 2025.
Private equity exits were down 50% in 2024, stretchingholding periods beyond five years and increasing the pressure on private equityfirms to recycle capital.
Also observed are emerging valuation gaps between public andprivate markets, leading to private equity sponsors directing dry powdertowards listed companies with stable cashflow profiles and under-leveredbalance sheets. At the same time, local corporates have become open tostrategic M&A – either to divest non-core assets or consolidate in sectorsfacing structural headwinds. The proposed divestment of Fonterra’s consumerbrands business (Mainland) is an example of this trend playing out locally andglobally.
IPO-specific future outlook
New listings have remained scarce, with no major NZX IPOs since 2023 – higher market volatility and interest rates stalled mostpost-Covid IPO ambitions. Heightened investor selectivity and global macro uncertainty continues to weigh on the risk appetite of investors in consideringnew listings, which directly affects the valuations private shareholders can achieve.
While the IPO window may be limited for smaller growthassets with a more speculative outlook, large and well-established businessesin mature markets, such as in the case of the Fonterra’s Mainland divestment,remain strong candidates for IPOs.
ASX sentiment supports this thesis, with predominantly largegrowth businesses, such as the IPOs of Digico and Guzman y Gomez, successfullylisting in 2024. Helping to improve New Zealand’s future IPO outlook areforthcoming regulatory changes, including amendments to prospective forecastinformation disclosure and lodgement requirements. These changes will reducecosts, lower friction for potential issuers and improve execution certainty,increasing IPO accessibility.
An optimistic second half
With both supply and demand-side drivers of M&A activityelevated, New Zealand capital markets are poised for continued momentum despiteglobal volatility. Our pick is a continuing trend of secondary issuances usingthe ANREO structure, IPOs of high-quality assets in the second half of 2025 andcalendar year 2026, as well as an inflow of foreign capital interested in NewZealand “safe haven” opportunities. All in all, a positive outlook.
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