Day Four: Thursday, March 29
New Zealand Stock Exchange (NZX)
Eric Reitman, Strategy; Damas Potoi, NZ Regulation
The New Zealand Stock Exchange began during the New Zealand gold-rush of the 1870s. Regional exchanges included Auckland, Dunedin, Christchurch, and Wellington. In 1984, the NZ government deregulated banking and eliminated interest rate controls, which precipitated significant increases in valuations. By the time Black Monday/Tuesday arrived in 1987, the NZSE was well overvalued. Share prices fell near 59% over the ensuing four months after the crash. In 1991 the NZSE implemented a computerized trading system, replacing the outcry market process. In 2002, the NZSE changed from a mutual company to a limited liability company. In 2003, the NZSE changed its name to the New Zealand Exchange (NZX) indicating a more appropriate representation of the exchange’s serves which include the New Zealand Stock Market (NZSX), the New Zealand Debt Market (NZDX) trading in corporate, government, and other debt securities), and the New Zealand Alternative Market (NZAX), for fast-growing developing companies, as well as non-traditional companies.
FACTS & FIGURES
Mark Weldon, CEO
SNAP SHOT March 21, 2007
“The NZX is positioning itself to provide New Zealand with increased liquidity in the equities and debt markets. Many of the challenges they are facing can be paralleled with those of many small start-ups and VC firms in NZ: not enough capital funding. The global stock market crash of 1987 has had a lasting effecting NZ—leading to a population that is highly risk averse, despite the fact that there are no capital gains taxes! Kiwis continue to be staunch real property investors and, due to the significant interest rates available, debt investors. These two alternative investment vehicles draw a significant portion of capital away from the equity market, inflicting a significant challenge on NZX to double the NZSX market capitalization over the next few years up to similar capitalization found in other markets. Further improvements to the current regulatory structure may inspire additional funds to enter the equities market, but there is no guarantee that this or any other market enhancing moves will persuade Kiwis to start adding cash to mutual funds or investing in equities.
Both gentlemen we met with provided interesting insights into the exchange which included regulatory agency within the NZX (as opposed to external agency), limited market capitalization as a percentage of GDP, suggesting a significant opportunity in front of them, and the limitations that NZX faces with such a small market.”
FILM New Zealand
FILM New Zealand was founded in 1994 by the screen production agency to act as the national film location office facilitating access both nationally and internationally to New Zealand as one of the world's best screen production destinations. It manages inquiries and provides vast amounts of information for filmmakers wishing to work in New Zealand such as information about locations, crews, permits, and transportation. Last year alone, FILM New Zealand fielded 1112 generic inquiries and 118 detailed project inquiries (of which 72 were for feature film projects) with an impressive initial response time of 24 hours.
“Both hosts expressed the importance for New Zealand to have “its own voice” in film, that is, to have motion pictures that represented the Kiwi perspective. The most successful movie to date to showcase the rich culture of the Maori in New Zealand was the recent film “Whale Rider”, which earned lead actress Keisha Castle-Hughes an academy award nomination. Ms. McCann also indicated the emerging popularity of “Maori Television”, a broadcaster of shows in the Maori language that has utilized incredible amounts of creativity despite having very limited resources for its productions. Both hosts also acknowledged the difficulty for New Zealand to compete in an industry that continues to be dominated by US films and the loss of some of their talented directors to “Hollywoodland”. The exception is Peter Jackson (of the Lord of the Rings fame) who remains steadfastly Wellingtonian and has to a certain extent, single-handedly spurred the development and growth of a number of significant businesses relevant to the film industry (e.g. Massive Software, WETA digital, WETA workshop).
Overall, Film New Zealand is an agency that clearly showed its pride among its place in the film industry and its confidence in its offerings (i.e. rich natural landscapes of New Zealand, incentives and grants to promote film productions). It emphasized the need to continue to promote its domestic productions but offers a warm welcome to international interests in filming in New Zealand.”
No. 8 Ventures
“It is said that a Kiwi can mend or create anything they need as long as they have access to a small amount of Number 8 wire.” No 8 Ventures was founded in 1999 to capitalize on the innate kiwi ingenuity and entrepreneurial spirit. No 8 Ventures invests in early stage New Zealand technology companies which have the potential to provide products and services on a global scale. Since inception, No 8 Ventures has invested in 14 New Zealand companies, which cover a broad spectrum of industries from software to early stage human pharmaceuticals biotech.
Jenny Morel – Executive Director
Jenny is the founding partner of No 8 Ventures. Prior to founding No 8 Ventures, Jenny was spent time in investment banking, including setting up Morel & Co Ltd, an investment bank which specialized in technology companies. She is currently a director for the following portfolio companies: Open Cloud Ltd, Argent Networks Ltd, VCU Technology Ltd and Surveylab Ltd.
"The conversation with Jenny Morel of No 8 Ventures provided a fascinating insight into the dual roles that Jenny finds herself managing. Jenny’s first role is as an active and participating team member for the portfolio companies for No. 8 Ventures. The second role is as an industry steward and spokesperson for the new and emerging New Zealand venture capital industry.
On the whole, the venture capital community in New Zealand is still in the early stages of development. In order for the community to grow it must have the guidance of experienced leadership which will in turn attract or build the necessary infrastructure that venture funded entities will rely upon to support continued growth. One such example was the need for banking institutions which provide opportunities to leverage debt for growing and successful companies as opposed to leveraging equity alone. Jenny identified ways in which she is involved in attempting to attract corporate partnerships which ultimately will offer a deeper capital pool along with greater opportunity to build ties with companies from a broader international base.
In the end, Jenny is an integral part of building the engine, the venture capital community, as well as the components themselves, No. 8 Venture’s portfolio companies, which will likely fuel the future economic growth of New Zealand."
Trade Me Ltd
Founder and Managing Director, Sam Morgan
TradeMe is New Zealand's largest internet auction website.Sam Morgan founded the site in 1999, and sold it in 2006 to Fairfax for NZ$700 million. Trade Me Ltd has become New Zealand's largest company of its type, and its site became the most popular website in the country in 2005. The group of sites collectively generate just over 50% of all web-page traffic originating from New Zealand-based servers. During peak hours, Trade Me has approximately 60,000 people online, and 700,000 auctions running. Trade Me shares many features with other online auction websites, such as the American auction giant eBay. Some of these features include "Buy Now", "Auto bidding" and the Safe Trader escrow service. Members in New Zealand can become "Address Verified" by confirming their street-address, and the site may block unverified members from bidding. Significantly, despite its global reach, eBay has failed to make a sizeable penetration in the geographically isolated New Zealand market.
“Sam Morgan was clearly one of the brightest entrepreneurs we met in New Zealand. He started with an idea and grew a company that made him one of the wealthiest men in New Zealand overnight. Beneath his soft-spoken exterior, his passion, drive and ingenuity shinned. What an inspiration!”
North & South’s New Zealander of the Year 2005, Peri Drysdale has built Snowy Peak Ltd, an export apparel company based out of Canterbury, from scratch. Her label is Untouched World. She has pioneered high performance eco-friendly fibres and has set up a charitable foundation to foster young leaders. Peri was made an MBE in 1992 for services to New Zealand (manufacturing and export) and in 2002 won the Most Ethical Company award in the Deloitte's Top 200 Companies.
Untouched World is a lifestyle brand that aims to mirror life in New Zealand. The eco-conscious and globally aware label symbolises much that is valued by New Zealanders - nature and the outdoors, and seeking new adventures. Untouched World’s clothing is created from innovative fabrics including ‘Mountainsilk’, which is 100 percent-pure, fine merino wool, for which New Zealand is renowned. The ‘Merinomink’ range is an innovation that marries a pest (the possum) with New Zealand’s best-known animal (the sheep). The merino wool-possum fibre blend created is durable, light, soft and warm.