10 Jun 2021

Catalist launches share trading and capital raising market

12:35 pm on 10 June 2021

A new share trading and capital raising market has been launched aimed at small and medium-sized businesses.

Stock market exchange graph price drop with red numbers investment lose of business financial digital background / C

The new market is aimed at companies too small to list on the main NZX exchange. (File image) Photo: 123RF

Catalist has just received the necessary official approvals to allow public involvement.

The new market is aimed at companies too small to list on the main NZX exchange, valued between $6 million and $60m, and wanting to raise up to $20m a year from investors.

Chief executive Colin Magee said the market would allow small and medium enterprises (SMEs) to list cheaply and with less regulation than the NZX.

Catalist chief executive Colin Magee.

Photo: Supplied

"SMEs make up a majority of New Zealand businesses, so there's a real need for those with growth potential to have better access to capital, and equally for investors to have better access to SME investments, to increase economic growth and job creation."

He said Catalist had some key differences to standard exchanges, using regular auctions for buying and selling shares, which would mean fairer pricing and increased liquidity for stocks which do not trade often.

Unlike the NZX, there would be no continuous disclosure of information, but disclosure for each auction.

"Traditional stock markets don't work for SMEs because the costs, continuous disclosure obligations, and focus on short-term share price get in the way of day-to-day operations and focusing on the long-term health of the business," Magee said.

The NZX has had two attempts at markets aimed at start-up or small companies, which it scrapped and rolled into one unified exchange in 2018.

The demands of those markets on smaller companies were shortcomings, which his company had learned from and overcome, Magee said.

"Investors can now access well-regulated investment opportunities in SMEs, where they can be confident in the standard of information they receive."

Catalist aimed at being a stepping stone market for companies to reach a certain size, which would allow them to think of a move up to the NZX, he said.