The lost opportunity in Fonterra’s big brands sale

Opinion: It was with mixed feelings that I heard farmers had voted to support the sale of part of Fonterra’s business, including household names Anchor and Mainland, for $4.22 billion. While I’m pleased farmers will see a well-deserved reward, it feels like a lost opportunity for all New Zealanders.

If these brands had been listed on the NZX as a separate company, it would have become the 20th largest on our stock exchange – roughly the size of Spark or Chorus. That would have given ordinary Kiwis the chance to invest directly, or via their KiwiSaver fund, in two of our most iconic brands and share in the success of our agricultural story. It also would have created a platform for future capital raising, keeping more ownership (and hopefully future value) here in New Zealand.

Listing on the NZX isn’t reserved for corporate giants. Take the made-in-New Zealand plastic container manufacturer Sistema. The company was sold to a US buyer almost a decade ago, but instead, Sistema could have listed. This would have allowed the founders to realise value from their years of effort while, if they wished, retaining part ownership and sharing in the future growth of Sistema with other Kiwis – many of whom still use their containers (sometimes even to store Anchor products).

That’s the real beauty of listing. Owners can choose how much of their company to sell. It’s not an all-or-nothing deal. They can “cash out” part of their success while keeping skin in the game and benefiting from future growth. Can you imagine selling companies like Google or Apple for millions of dollars, only to see them worth trillions today?

For founders looking to step back from day-to-day operations, listing can also provide a smooth succession path without requiring a full sale to an overseas buyer.

There’s also the simple reality that local businesses often need more capital – to expand offshore, adopt new technology, or modernise their operations. Bank lending is one option, but it brings risk, as loans must be repaid and interest rates can rise. Equity raised through a stock-exchange listing, by contrast, doesn’t have to be paid back, and investors share in both the risk and the reward.

Listing allows some of the money raised initially to be reinvested in the company, or provides the option to raise more money in the future if needed. If done via a rights offer, additional capital raising would not dilute existing ownership.

Capital investment matters because it’s closely tied to productivity. For years, economists have argued that New Zealand’s relatively weak per-capita productivity is linked to under-investment. A deeper and more dynamic share market could help fix that.

And now, with more New Zealanders enrolled in KiwiSaver than ever before, there’s a growing pool of local money looking for productive, long-term investments. Roughly six percent of the country’s total wages could flow into KiwiSaver funds each year, and a good portion of that is invested through the NZX. More listings would mean more opportunities for KiwiSaver funds to back Kiwi businesses, boosting both retirement savings and the local economy.

The Australian experience with compulsory superannuation shows how this can work. A steady inflow of domestic savings has helped grow local companies and deepen capital markets – a virtuous cycle that New Zealand could easily emulate.

Listing also doesn’t cost as much as many might think. Listing and audit costs represent only a small proportion of a company’s overall expenses, especially relative to the capital, credibility, and growth opportunities that listing can unlock. Corporate governance and environmental requirements are designed to promote best practice and achieve sustainable long-term growth.

So to the country’s business owners – from our farms to our tech start-ups – I say: don’t sell. List.