Xero boss Rod Drury encourages young tech firms to list on the NZX, even though it's leaving.

Xero's decision to delist from the NZX has been labelled a "huge red flag" for the local exchange by an Auckland fund manager.

The software company announced it would delist from the NZX and "consolidate" its share trading on the ASX in Australia, where its shares are also listed.

Chief executive Rod Drury said the business would remain headquartered in Wellington and domiciled in New Zealand, and there would no change to its tax base.



"We remain a New Zealand company. New Zealand will always be our home," he told analysts on a conference call discussing Xero's interim results, which were also announced on Thursday.



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"We have over 1000 people here. We are investing putting offices in the provinces. None of that changes at all."

DAVED WHITE/STUFF Xero will no longer be flying any flag for the NZX.

Sam Stubbs, managing director of Kiwisaver fund manager Simplicity, said the delisting was "a huge red flag" for the NZX but entirely rational from Xero's point of view.

"As a percentage of GDP, the New Zealand sharemarket is small relative to other developed economies and New Zealand investors have been the losers.

"As a KiwiSaver manager, the real issue is the ongoing relevance of the NZ stock exchange as a place to invest," he said.

Drury said Xero was getting "inbound interest from investors all over the world" keen on buying shares in the firm, and centralising its listing in Australia would make it "much easier to get those investors on to the register".

It would be easier for investors to compare Xero's value with other opportunities as more businesses similar to Xero were quoted on the ASX, he said.

Getting into the major Australian indices such as the ASX200 would also mean "the next level of analysts" would start reporting on the firm "which was part of the pathway for creating value", he said.



Xero shares fell 4.3 per cent to $32.60 within minutes when trading opened on the NZX on Thursday morning, while shares in the NZX – which is listed on its own market – fell 3.3 per cent to $1.16.

Drury said its price drop was to be expected as the delisting triggered some sales, but he expected that impact would wear off within a few days as people adjusted to "the new normal".



Kiwi shareholders, including himself, owned about 30 per cent of the shares in Xero and would not need to take any action as their holdings would automatically be transferred to the ASX, he said.



New Zealand sharebrokers charge similar fees for buying and selling shares on the NZX and ASX, with ASB Securities for example charging a commission of 0.3 per cent on both markets, with a NZ$30 or A$30 (NZ$33) minimum trading fee.



But investors can expect to lose up to about 2 per cent in the currency conversion transferring the proceeds of share sales back into New Zealand dollars through the major banks.

Drury said that was a small matter compared to the gains most shareholders would have made investing in the stock.

Trading in Xero shares will cease on January 31 and it will delist from the exchange on February 2.

Xero is the sixth-most valuable Kiwi company on the NZX, having had a market worth of just over $4.7 billion prior to the announcement.

It accounts for about 3.6 per cent of the total market value of the NZX's main board.

NZX spokeswoman Hannah Lynch said it was "naturally disappointed that Xero has decided to leave the local market", but pleased to have paved a pivotal role in its success.

"We are proud of Xero's achievements over the past decade. Its strong performance and support from the New Zealand market has generated opportunities and wealth for local investors," she said in a statement.

Ironically, the delisting decision comes after a bull run in Xero shares, which had risen in value by about 50 per cent in the six months prior to Xero's announcement.​

Drury said telling the NZX that Xero was leaving had been hard.

He "thanked" the NZX for "providing a valuable platform to support Xero's first decade as a public company".

Drury also tweeted that Xero still believed listing locally was "best for aspiring young techs".

"Our success wouldn't be possible without the support of the NZX and our shareholders, he said.

Here’s all the news in the @Xero H1 Results

- ACMR up to $417m

- EBITDA positive for the first time (yay!!)

- Consolidating listing on ASX



Thank you @NZXGroup group for your support for 10+ years. We still believe listing locally best for aspiring tech’shttps://t.co/0Tx0xajlVD — Rod Drury (@roddrury) November 8, 2017

Xero, which employs more than 1800 staff in total, announced it had halved its net loss to $21m in the six months to September, from a loss of $44m in the same period last year.

Its operating revenue for the half year rose 37 per cent to $188m.