New Zealanders are ready to invest in technology stocks, after witnessing the boom offshore, says IT Capital director David Seton.
In the US there’s an infatuation with Internet or technology stocks, but it hasn’t been matched here because a lack of technology players listed on the New Zealand Stock Exchange.
Listed on the NZSE, IT Capital has been set up to address the funding gap it believes inhibits small Australasian IT companies, by providing early stage funding not readily available in this market.
The company grew out of a company called Iddison, founded by Seton, which did venture capital work in natural resources, entertainment and agricultural sectors in Asia.
More detail on the new-look IT Capital won't be made public until after a shareholders’ meeting in March.
Despite this, Seton says there is a lot of interest.
“Compared to our past trade, there’s been a fairly significant increase in turnover of company stock.”
He says that before the company name change and announcement about changing direction, stock got down to about 7c or 8c, and now it is trading at about 13c.
Seton says IT Capital will be the first general technology stock in New Zealand. He says while there are some others - like the Advantage Group (an eftpos company) - this will be the first venture capital technology stock to enable kiwi investors to invest in a extensive range of technology stocks.
“We’re specially targeting the IT sector, but within that the investments will be across a broad range.”
He says the New Zealand public is ready to invest in a technology stock, after witnessing the boom in IT stocks in the US.
“We’re now seeing it a little bit closer to home in , where there’s a mini-technology boom in the stock market, and I think it’s now beginning to flow over. It hasn’t been available to New Zealand investors.”
In the US many commentators believe the technology stocks bubble will eventually burst, partly because many of the companies with high values aren't even making a profit.
Seton believes the same will happen here.
“To some extent that is happening in Australia … and that’s why we’re taking a slightly different approach. We’re not just a single interest company, and we’ve put together a management team and a structure which ensures that our investments will be quite sound.”
He says people have to be careful that they don’t just jump on the latest bandwagon.
“If you do that, the bubble will burst. I do think that there are stocks in the States that are over-valued and are going to come off but that doesn’t mean to say that investment won't go on and that there won’t be growth again.”
Seton says there’s a huge need for venture capital in the technology sector in New Zealand.
“Once we’ve proven it works I think you'll see a number of other people looking at doing it as well.”