December 13, 2024 • 6 mins
The Government is making changes to get more capital flowing around the economy.
Commerce and Consumer Affairs Minister Andrew Bailey says he is going to make it easier for KiwiSaver funds to invest in unlisted companies and assets.
Financial Services CEO Kirk Hope talks to Ryan Bridge.
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Speaker 1 (00:00):
The government is making changes to try and get more
capital flowing around the economy. Commerce and Consumer Fairs Minister
Andrew Bailey, he's come out and he's going to make
it easier for key we Saver funds to invest in
unlisted companies and assets. He's also going to try and
remove some of the hurdles some of the barriers that
the listed companies on the end index face, like climate
change rules, et cetera. Kirk Hope, the CEO of the
(00:21):
Financial Services Council, he's with me tonight, Kirk gooday, today,
you do good, Thank you. Let's talk with the keep
we Saver funds. First, why can't key we Saver funds
invest in unlisted companies? Now, what's the logic for that?
Speaker 2 (00:36):
So they can? It's just very difficult because there's some
liquidity rules that are that are in place, and so
what does that actually mean. It's because because kee we
savers can withdraw funds out of the out of the
keep Saver fund after the hit retirement age. So that's
that's something they can do now. It just means that
(00:56):
there are some rules in place, which means that that
if they weren't in place, you know, make it easier.
It makes it easier for those key savers, were harder
for those KEP savers to withdraw. So if you've got
an what's called an a liquid asset, you know, if
you're talking about an infrastructure fund that you might have
a long long life that would be seen as an
(01:17):
an I liquid asset. You know, that means the fund
can't liquidate it and pay it out or pay a
portion of that out. So there's there's some things that
Minister Bailey's done here to make it easier for for
KEP we save fund managers to invest in some of
these less liquid assets.
Speaker 1 (01:33):
How do you do that? Then if you need your
money out.
Speaker 2 (01:36):
Well, there's there's a couple of things that they're looking at,
for example, extending or asking key we savers for example,
if they want to invest in those types of assets,
if they want their funds to be invested in those
types of assets, and then having a longer notice period.
For example, the current notice periods ten days, and so
you know that might be that might stretch out to
(01:57):
thirty days or something, but they're going to consult on
on it and come back to the market.
Speaker 1 (02:02):
So you would basically forego some flexibility around withdrawal in
order to be able to invest in these more liquid assets.
Speaker 2 (02:10):
Yeah, as an investor.
Speaker 1 (02:11):
As an investor, yeah, cool. Interesting. So that's one side
of the equation, isn't Is it, by the way, something
you think that the key saver funds will actually want
to do as well.
Speaker 2 (02:22):
There's some that have managed to work through some of
the some of the more difficult issues with that liquidity
management process. So for example, I think simplicity here and
have have some housing investments. So you know, typically this
is just to make it easier for more more key
we saver funds to invest in those longer term assets.
(02:45):
So yeah, I think it will make a difference most certainly.
Speaker 1 (02:48):
What types of projects tunnels, railed, stuff like that.
Speaker 2 (02:52):
Yeah, anything where there's an income that can be extracted
out of the asset if you like, over a long
period of time. It would be it would be would
be roads, tunnels, housing potentially or larger housing estates and
stuff like that, build to rent housing for example.
Speaker 1 (03:07):
Let's talk about the changes on the other side of
the equation here. This is to do with companies that
don't aren't listing on the z X. They're kind of
maybe on the threshold and they just think they're actually
too hard basket. There are some hurdles, there are some
compliance costs from being on the n z X, and
the Minister is going to take a look at those.
What do you make of his moves in that space.
Speaker 2 (03:29):
Yeah, I think it's actually really really good move if
you look. So that one of the key things that
the government's doing and the Minister is doing it making
what's called prospective financial information voluntaries. So when you list,
you've got to go through a process of providing and
publishing forward looking prospective financial information about the company for investors.
(03:51):
So the costs are pretty expensive. They can be from
five to fifteen percent of the total IPO costs, So
that is quite a significant barrier if you're you know,
if you're relative living, modest sized firm, but you really
need to get capital in. The information is not necessarily
helping investors. That was the feedback from the investor community.
So so what the government of doing is looking at
(04:14):
looking at making that voluntary and then that'll enable that
will remove some of those costs out of the IPI process.
Speaker 1 (04:22):
One of those areas is climate disclosures. You have to
disclose what your impact on the climate is do other
countries do that? Does Australia make you do that?
Speaker 2 (04:32):
Yeah? They do. Actually, so we already have climate related
disclosure requirements, but they occurre it very low threshold, so
if you're a sixty million dollar market cap company, you
would have to be disclosing. What the government and the
Ministry of proposing to do is raise that to a
five hundred and fifty million dollar cap for market capitalization.
(04:57):
And then there are some other things which I will
also think will help. At the moment, there is some
significant direct to liability for some of the if you
make if you breach some of the climate related disclosure
requirements if you're a director, so there's personal liability for
some of those breaches. There will still be liability for directors,
(05:18):
for example, for things we have acted deliberately or recklessly.
But one of the things that certainly we've been seeing
is that the costs to get that climate related disclosure
stuff right is very very expensive for companies and so
so this is a positive change. And that they're also
doing some stuff around increasing the thresholds for funds as well,
(05:38):
up to five billion from one billion. So overall that
aligns us with Australia and that that is a positive
thing as well.
Speaker 1 (05:45):
Kirk, thank you very much for that. Kirk Courk Financial
Services Council CEO on changes that the Minister Andrew Bailey
is making and looking at making both too can we
savor but also to hurdles that's stopping businesses from getting
on the NXT exit.
Speaker 2 (05:59):
For more from Head Duplessy Allen Drive.
Speaker 1 (06:01):
Listen live to News Talks at B from four pm weekdays,
or follow the podcast on iHeartRadio.
The government is making changes to try and get more
capital flowing around the economy. Commerce and Consumer Fairs Minister
Andrew Bailey, he's come out and he's going to make
it easier for key we Saver funds to invest in
unlisted companies and assets. He's also going to try and
remove some of the hurdles some of the barriers that
the listed companies on the end index face, like climate
change rules, et cetera. Kirk Hope, the CEO of the
(00:21):
Financial Services Council, he's with me tonight, Kirk gooday, today,
you do good, Thank you. Let's talk with the keep
we Saver funds. First, why can't key we Saver funds
invest in unlisted companies? Now, what's the logic for that?
Speaker 2 (00:36):
So they can? It's just very difficult because there's some
liquidity rules that are that are in place, and so
what does that actually mean. It's because because kee we
savers can withdraw funds out of the out of the
keep Saver fund after the hit retirement age. So that's
that's something they can do now. It just means that
(00:56):
there are some rules in place, which means that that
if they weren't in place, you know, make it easier.
It makes it easier for those key savers, were harder
for those KEP savers to withdraw. So if you've got
an what's called an a liquid asset, you know, if
you're talking about an infrastructure fund that you might have
a long long life that would be seen as an
(01:17):
an I liquid asset. You know, that means the fund
can't liquidate it and pay it out or pay a
portion of that out. So there's there's some things that
Minister Bailey's done here to make it easier for for
KEP we save fund managers to invest in some of
these less liquid assets.
Speaker 1 (01:33):
How do you do that? Then if you need your
money out.
Speaker 2 (01:36):
Well, there's there's a couple of things that they're looking at,
for example, extending or asking key we savers for example,
if they want to invest in those types of assets,
if they want their funds to be invested in those
types of assets, and then having a longer notice period.
For example, the current notice periods ten days, and so
you know that might be that might stretch out to
(01:57):
thirty days or something, but they're going to consult on
on it and come back to the market.
Speaker 1 (02:02):
So you would basically forego some flexibility around withdrawal in
order to be able to invest in these more liquid assets.
Speaker 2 (02:10):
Yeah, as an investor.
Speaker 1 (02:11):
As an investor, yeah, cool. Interesting. So that's one side
of the equation, isn't Is it, by the way, something
you think that the key saver funds will actually want
to do as well.
Speaker 2 (02:22):
There's some that have managed to work through some of
the some of the more difficult issues with that liquidity
management process. So for example, I think simplicity here and
have have some housing investments. So you know, typically this
is just to make it easier for more more key
we saver funds to invest in those longer term assets.
(02:45):
So yeah, I think it will make a difference most certainly.
Speaker 1 (02:48):
What types of projects tunnels, railed, stuff like that.
Speaker 2 (02:52):
Yeah, anything where there's an income that can be extracted
out of the asset if you like, over a long
period of time. It would be it would be would
be roads, tunnels, housing potentially or larger housing estates and
stuff like that, build to rent housing for example.
Speaker 1 (03:07):
Let's talk about the changes on the other side of
the equation here. This is to do with companies that
don't aren't listing on the z X. They're kind of
maybe on the threshold and they just think they're actually
too hard basket. There are some hurdles, there are some
compliance costs from being on the n z X, and
the Minister is going to take a look at those.
What do you make of his moves in that space.
Speaker 2 (03:29):
Yeah, I think it's actually really really good move if
you look. So that one of the key things that
the government's doing and the Minister is doing it making
what's called prospective financial information voluntaries. So when you list,
you've got to go through a process of providing and
publishing forward looking prospective financial information about the company for investors.
(03:51):
So the costs are pretty expensive. They can be from
five to fifteen percent of the total IPO costs, So
that is quite a significant barrier if you're you know,
if you're relative living, modest sized firm, but you really
need to get capital in. The information is not necessarily
helping investors. That was the feedback from the investor community.
So so what the government of doing is looking at
(04:14):
looking at making that voluntary and then that'll enable that
will remove some of those costs out of the IPI process.
Speaker 1 (04:22):
One of those areas is climate disclosures. You have to
disclose what your impact on the climate is do other
countries do that? Does Australia make you do that?
Speaker 2 (04:32):
Yeah? They do. Actually, so we already have climate related
disclosure requirements, but they occurre it very low threshold, so
if you're a sixty million dollar market cap company, you
would have to be disclosing. What the government and the
Ministry of proposing to do is raise that to a
five hundred and fifty million dollar cap for market capitalization.
(04:57):
And then there are some other things which I will
also think will help. At the moment, there is some
significant direct to liability for some of the if you
make if you breach some of the climate related disclosure
requirements if you're a director, so there's personal liability for
some of those breaches. There will still be liability for directors,
(05:18):
for example, for things we have acted deliberately or recklessly.
But one of the things that certainly we've been seeing
is that the costs to get that climate related disclosure
stuff right is very very expensive for companies and so
so this is a positive change. And that they're also
doing some stuff around increasing the thresholds for funds as well,
(05:38):
up to five billion from one billion. So overall that
aligns us with Australia and that that is a positive
thing as well.
Speaker 1 (05:45):
Kirk, thank you very much for that. Kirk Courk Financial
Services Council CEO on changes that the Minister Andrew Bailey
is making and looking at making both too can we
savor but also to hurdles that's stopping businesses from getting
on the NXT exit.
Speaker 2 (05:59):
For more from Head Duplessy Allen Drive.
Speaker 1 (06:01):
Listen live to News Talks at B from four pm weekdays,
or follow the podcast on iHeartRadio.
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