Yesterday, I came to the surprising realisation that 20% of my portfolio was in New Zealand-based companies. That?s not as unusual as it might sound, since when you only own 15 companies, your position sizes tend to be larger as a % of your portfolio- but it got me thinking about business in New Zealand.
If you?re a company and you?re ambitious, you can?t stay in NZ. Nor can most NZ businesses easily expand overseas ? Australia is full of grocery stores and retailers already. To expand as a New Zealand business, you either need:
A product you can take to…
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Yesterday, I came to the surprising realisation that 20% of my portfolio was in New Zealand-based companies. That’s not as unusual as it might sound, since when you only own 15 companies, your position sizes tend to be larger as a % of your portfolio- but it got me thinking about business in New Zealand.
If you’re a company and you’re ambitious, you can’t stay in NZ. Nor can most NZ businesses easily expand overseas – Australia is full of grocery stores and retailers already. To expand as a New Zealand business, you either need:
- A product you can take to the globe, or
- Management that can take you global (ideally both)
Therefore, I believe investors need to pay more attention to New Zealand companies that dual-list. Ambitious businesses will likely need to list in more than one location, to attract capital for their expansion – and Australia is right next door, with a similar regulatory and cultural environment. Thus, I believe ‘Kiwi businesses listing in Australia’ could be used as a kind of mental shortcut to find ‘ambitious businesses that want to go global’.
Here are 4 NZ businesses that are taking their products to the globe:
A2 Milk Company Ltd (Australia) (ASX: A2M) – developing a healthier dairy product that is potentially better than regular milk.
CBL CORP FPO NZX (ASX: CBL) – a specialist insurer and surety bond provider that writes most of its business in France, but is expanding in other countries.
Gentrack Group Ltd (ASX: GTK) – offers critical billing and management software to clients like utility companies and airports.
XERO FPO NZX (ASX: XRO) – offers time-saving cloud accounting software for small business owners and accountants.
Of course, there are other NZ businesses like an energy generator, a pay TV company, and poultry company TEGEL GRP FPO NZX (ASX: TGH) that either won’t or can’t go global. I’m not saying that all Kiwi businesses are strong buys – I’m saying there is only a small amount of NZ based companies listed on the ASX (so they are easier to filter), and a surprisingly large percentage of these have global ambitions.
I think investors should pay more attention to Kiwi companies in the future, and I have made a mental note to do so myself.
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Motley Fool contributor Sean O'Neill owns shares of A2 Milk, CBL Limited, and Xero. The Motley Fool Australia owns shares of A2 Milk and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.