The market for initial public offers may have been subdued again in New Zealand, but global activity was rampant – driven by central bank stimulus and a wash of capital. The Business Herald looks back on some of the highlights featuring New Zealand companies, some good and some not so good.
A swan dive for Allbirds
After months of speculation, sustainable shoemaker Allbirds – co-founded by former All Whites captain Tim Brown – finally listed on the tech-heavy Nasdaq exchange in November.
The IPO saw the company raise around US$300 million ($443m), with the offer price set at US$15 per share.
The shares started trading at US$21.21 apiece and closed their first day at US$28.64, for a market capitalisation of US$4.1 billion.
At this high point, co-founder Brown’s stake in the company was valued at about US$459m ($650m).
But the gains were short-lived and the shares plunged as the cost of opening stores weighed on profit margins. The stock hit a low of US$12.96 in mid-December.
Still, it has still been a remarkable trajectory for a company that only five years ago cast Brown’s mother as an extra in an ad to keep costs down.
The question now is where to next for the Kiwi shoe brand that counts Leonardo DiCaprio, Ashton Kutcher, Cindy Crawford and former US President Barack Obama as fans. Sales remain healthy, rising 33 per cent to US$62.7m in the recent third quarter, despite a wider net loss of US$13.8m.
Rocket Lab's slingshot journey
The Peter Beck-founded Rocket Lab got in on the tail-end of the “spac” boom in August when it merged with a special purpose acquisition company called Vector Acquisition, then backed into Vector’s slot on the Nasdaq.
The deal, which valued Rocket Lab at US$4.1b ($6b), raised US$750m for Beck’s company. It quickly put the funds to work on development of its new, larger Neutron rocket, the construction of a new satellite component plant in Auckland, and the acquisition of two satellite system makers: Maryland-based Planetary Systems Corporation for US$42m and Ohio-based Advanced solutions for US$40m.
Rocket Lab’s largest shareholders ahead of the Nasdaq listing were a clutch of Silicon Valley-based venture capital firms.
But there were also four local investors in the frame: Beck, who retained a 13.1 per cent stake in the company; Sir Stephen Tindall’s K1W1; Mark Rocket (aka Mark Stevens) – who joined Rocket Lab as a director for four years from 2007; and ACC.
As with other space transportation stocks, Rocket Lab shares, which listed at US$10, have been volatile – rising as high as US$20.72 before easing back. Its recent trading price of US$12.58 valued Beck’s holding at US$686m ($1.01b).
The Nasdaq listing also saw participation from some 4000 small Kiwi retail investors, who invested about $10m through factional ownership platforms Sharesies, Stake and Hatch.
And it also made paper millionaires of more than 100 past and present Rocket Lab staff who had been awarded bonus stock, with more than 180 having holdings worth at least $500,000.
My Food Bag's poor delivery
The NZX largely missed out on the IPO action this year and the March listing of My Food Bag didn’t help matters.
Many first-time investors were left disappointed as the stock fell on day one and continued to fall as the company battled rising costs in a competitive market.
My Food Bag sold 184.9m shares to institutional and retail investors in the IPO, with most of the $342m proceeds going to existing shareholders selling down their holdings, including private equity firm Waterman Capital, which netted some $193.9m from the float.
The original shareholders retained a roughly 25 per cent stake among them, while Milford Funds, Harbour Asset Management and Investment Services Group picked up a total of 18 per cent.
The shares opened trading on the NZX at $1.76, down 5 per cent on the offer price of $1.85, and ended the day at $1.74, down 6 per cent.
Since then the stock has steadily drifted lower, recently trading at $1.15 for a market cap of about $280m.
My Food Bag has managed to meet its target forecasts, turning in a net profit of $9.4m in the six months to September, up 25 per cent, and paid its first dividend of 3c a share.
But the company is experiencing inflation pressure and has had to increase the cost of its products by 4-5 per cent this year.
DGL shows how it's done
Australasian chemicals specialist DGL Group listed in May and has been hoovering up companies ever since.
The company, whose share price has tripled since its debut, has notched up seven acquisitions since listing.
DGL, which makes, transports, stores and processes chemicals and hazardous waste, debuted on May 24 at $1.10 – a 10 per cent premium to its $1.00 issue price, after successfully raising $100m.
The stock has soared post listing – reaching a high of $3.30 on the NZX in October before pulling back to just under $3.
Founder and chief executive Simon Henry, who owns over half the company, said the IPO was not about selling down ownership, as many are, but about raising funds for growth.
Henry said the market seemed to have a “lust” for an old-fashioned company when DGL came to the market. He says DGL has the type of balance sheet that does something physical and produces a profit, “as opposed to those companies that have a flashy story but no profit”.
He decried the “take the money and run” approach of some IPOs that have been designed to give existing owners a profitable exit.
“I came to the market to grow the business, not to sell the business.”
Vulcan takes its opportunity
Another Australasian company, Vulcan Steel, listed in New Zealand and Australia in November and the stock has met with strong demand ever since.
Like DGL, its roots are in New Zealand but the bulk of its business is in Australia.
Vulcan has heavily upgraded its earnings forecasts for the June 2022 year, following stronger-than-expected trading over October and November.
The dual-listed company now expects its net profit to come in at A$93m-A$100m, up 26 to 35 per cent on its prospectus forecast of A$74m.
Vulcan said it now expects its earnings before interest, tax, depreciation and amortisation to be in a A$174m-$184m range, up 18 to 25 per cent on its prospectus forecast of A$147m.
Shares in Vulcan Steel debuted on the ASX at A$7.20 – 10 cents over their A$7.10 offer price – and recently traded at $9.56.
The stock is also listed on the NZX but the ASX is its primary listing.
The IPO comprised a A$371.6m ($386.8m) sell-down by existing shareholders.
Vulcan now has a market capitalisation of around A$1.1b.
Chief executive Rhys Jones said the listing was a pivotal step for the company. One fifth of Vulcan’s employees have become shareholders as part of a priority offer.
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