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.
