Company turnarounds often emphasise capital raisings, acquisitions and new leadership. Less considered is the role of exchange listings.
New Zealand-based transport group MOVE Logistics Group (ASX: MOV) dual listed on ASX in July 2022. MOVE, already listed on NZX, executed a direct listing on ASX under the NZ Foreign Exempt regime without raising any capital at the time.
MOVE Chair Lorraine Witten said at the time: “The dual listing provides access to a broader range of investors and a larger pool of capital as we look to unlock the full value of our company for shareholders in Australia and New Zealand.”
The dual listing is an important change. Headquartered in New Plymouth, the 153-year-old company had a long history in regional NZ, under different names and operations.
MOVE (then known as TIL Logistics) joined NZX in December 2017 through a reverse (backdoor) listing. TIL acquired the shares of a struggling investment company. With a large shareholding held by the founders, TIL had low share liquidity and lacked support from institutions.
In 2021, Chris Dunphy, Mark Newman and Grant Devonport joined TIL’s Board, led by experienced director and newly appointed Chair, Lorraine Witten. Mark and Chris were both former executives of Mainfreight (NZX: MFT), with Dunphy helping take Mainfreight public in 1996 and spearheading its global growth. Mainfreight is NZ’s largest freight company.
Shortly after joining the TIL Board, Dunphy became the company’s Executive Director. The Board initiated a two-year “reset program” through a capital raising, management and board changes, and a rebranding of the company to MOVE Logistics Group. Dunphy, a turnaround specialist, had his work cut out.
In October 2021, MOVE announced a NZ$40 million capital raising. The company needed to bolster its balance sheet to quicken its brand refresh, invest in technology, modernise the fleet and lease new freight and maritime equipment.
The institutional bookbuild was more than two times oversubscribed. The retail bookbuild was also well supported. Dunphy and Newman’s history with Mainfreight – an NZ$6.6 billion company – helped to attract investors.
Bell Potter Securities, an Australian broker, and Craigs Investment Partners, a leading NZ advisory firm, were joint lead managers and underwriters on MOVE’s capital raising.
“We were happy with the capital raising,” says Dunphy. “It shored up MOVE’s balance sheet but was not too dilutive in terms of equity. The capital raising brought several Australian institutions to MOVE’s share register for the first time. It also enabled a selldown by the company’s founding shareholders.”
Australian investors took about two-thirds of the NZ$40 million capital raising. NAOS Asset Management, First Sentier Investors and Anacacia Capital became shareholders. About a quarter of MOVE, capitalised at $134 million [ii], is now Australian owned.
Dunphy says the capital raising telegraphed MOVE’s intentions to attract Australian investors, expand in this market and dual list on ASX. “The dual listing was really about positioning MOVE for future growth and accelerating the company’s transformation.”
The dual listing helps MOVE in several ways. First, it exposes the company to a larger capital pool and investor base than is available in NZ. As new investors join Move’s share register, the potential is higher share liquidity and inclusion in key sharemarket indices in Australia, over time. Index inclusion can attract local and global investors.
Second, the dual listing could aid MOVE’s acquisition strategy. “We see potential to use MOVE scrip to help fund acquisitions,” says Dunphy. “There are a lot of family-owned freight businesses that could look to sell if the kids don’t want to be in charge.”
The third benefit is profile. MOVE wants to grow its Trans-Tasman operations. An ASX dual listing helps raise its awareness in this market. “MOVE has a considerable position operationally in NZ and intends to expand into Australia,” says Dunphy.
Dunphy has strong market connections. He is a former equities analyst and has lived in Melbourne for 24 years. “I enjoy investor relations. I like talking to institutions and investment banks and built relationships in this area during my time at Mainfreight.”
An investor-relations priority is expanding research coverage of MOVE. Bell Potter is expected to research MOVE and other broking firms are interested. Broking coverage helps promote microcap companies to retail investors, advisers and institutions.
Attracting Australian retail investors is another goal. “MOVE has quite a large retail ownership but most of that is in NZ,” says Dunphy. We see an opportunity to bring Australian retail investors to MOVE’s register over time. The ASX listing helps in that regard.”
Another benefit of dual listing is peer comparisons. MOVE is part of an expanding group of logistics companies on ASX. This helps analysts compare valuations of emerging logistics companies and creates economies of scale in their research.
For all the potential, Dunphy says the immediate goal is MOVE delivering on its turnaround. Early signs are encouraging. In its FY22 result, MOVE delivered earnings in line with previous guidance in a difficult logistics market. The company said it had made solid progress in its two-year turnaround strategy.
In the past 12 months, MOVE has rebranded, restructured and simplified the business, assembled a team of industry experts and initiated a new coastal shipping strategy with $10 million in co-funding from Waka Kotahi NZ Transport Agency.
MOVE’s reset is also delivering improvements in its freight business and its Contract Logistics division is “poised for growth”. International freight volumes have recovered to pre-COVID-19 levels and MOVE is benefitting from record pricing of ocean freight.
MOVE’s stock rallied from about A$1 at its ASX dual listing in July 2022 to $1.28 in late August, and was $1.15 in mid-October 2022.
[i] At 19 October 2022
[ii] At 19 October 2022