Woolnet, the Internet wool-trading subsidiary of the Wool Board, looks like being spun off as a partially independent company with private investors taking a substantial minority stake.
“We are having Woolnet valued [for this purpose] and are already talking to interested parties,” says managing director Lance Wiggins. Both New Zealand and overseas entities have expressed interest, he says.
Such a move would give Woolnet capital to grow faster, and would bring to the deal other parties with interest and expertise in wool trading.
The potential investors are “industry people, heavily involved with buying and selling wool”, Wiggins says, but he will give no further information that might identify them.
A majority of the company — “probably about 60%” — will remain in the hands of the Wool Board and through it the country’s wool farmers.
Asked when a shareholding change might go through, he says, “I’d be disappointed if we didn’t have it sorted by Christmas.” But the timing of such deals is always an unknown quantity, he admits.
Volumes of wool traded through the online system are doubling every month, Wiggins claims. In the latter half of August and the first half of September, Woolnet clocked up $1 million worth of sales in a month for the first time.
It’s still a small share of the $800 million-a-year total sales of wool, “but we’ve only been going for nine months”, he says. “You don’t expect to gain a 50% share of the market overnight.”
In the first half of the year, when wool sales overall decline, Woolnet was still increasing its volume, he says.
The online trading system has been criticised by some wool exporters. Criticism continues, Wiggins acknowledges, “but it’s coming from people who have never used the system”. Woolnet had a “review team” of users re-examine the system several weeks ago, “and all the suggestions they came up with were things we had under development already”.
Planned development includes an ability to trade in currencies other than New Zealand dollars, which should attract overseas buyers.
“You put up something new and people who don’t want to use it throw rocks at it,” says Wiggins. “That’s the story of innovation.”