Broking firm lists on New Capital Market

By Chris Hutching

Friday 12th May 2000

The third New Capital Market (NCM) listing will give investors an opportunity to buy into Wellington-based broking and investment firm Reuhman and Co and its publication the New Zealand Investment Journal.

The vehicle expected to be listed is nzij.co.nz. An investment statement and prospectus should be available in a couple of weeks.

The acquisition of sharebroker and investment banker Reuhman and Co is the potential "key transaction" that all NCM listings must have. This transaction can only be adopted on the vote of minority shareholders within 18 months, according to the rules. The amount that will be sought to buy the businesses will depend on valuations yet to be carried out.

Initially, NCM listings may seek $600,000 from the public in minimum parcels of $500. Promoters' funds may boost the amount to $800,000. This money must be used only for things such as obtaining valuations to be presented to shareholders. It may not be used for day-to-day running expenses on, for example, directors' fees, offices or cars. The money is held in trust and if a key transaction does not proceed it may be repaid in part or full to investors. NCM rules require that potential investors be warned an NCM issue is speculative and they are designed for people who can bear the loss of their entire investment.

But once shareholders have accepted the key transaction, NCM companies may raise nearly $10 million in three tranches.

Reuhman director John Reuhman said the NCM was one of the most exciting developments and it had been structured in a straightforward and prescriptive way that simplified procedures.

Until now, private placements had been time-consuming and difficult to structure. For example, his company had been involved in the $2 million private capital raising for Submarine Adventures, a tourism operation destined for Te Anau. This had involved many hours of approaching investors who must fall within the the Securities Commission definition of habitual or experienced investors. Confidentiality was then sought from each of these investors before an offer could proceed.

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