In December 1986, all of the 10 largest companies had private sector origins, and most were named after their creators.
Top 10 company founders included Ron Brierley, James Fletcher, James Wattie, Bob Jones and Frank Renouf.
Chase and Equiticorp were also dominated by individuals, Colin Reynolds and Allan Hawkins respectively.
Thirteen years later only Carter Holt Harvey and Brierley Investments remained in the top 10, and Brierley’s value is down from $5481 million to $1097 million.
At the end of 1999, three of the top 10 companies – Telecom, Contact Energy and Auckland International Airport – had public sector origins.
Telecom’s share price closed in 1999 at $9 – having reached $10 during the year – and the company had a market value of $15,775 million. This was more than 3.6 times the share market value of Carter Holt Harvey, the NZX’s second largest company.
Long-time Telecom shareholders will have been stunned by the interview with Theresa Gattung, Telecom’s chief executive from 1999 to 2007, in the Australian this week.
It appeared under the heading “Defensive strategy turns to gold for Gattung”.
Gattung boasted that she sold her Telecom shares after leaving the company in mid-2007, when its share price was around $4.50, and bought gold bullion, which has risen 140 per cent since then.
She told the Australian “I am a conservative investor. I look to property, cash and precious metals.” She went on to add, “I ran a $10 billion company for nearly eight years” – but did not mention that Telecom was a $16 billion company when she started as chief executive but had a sharemarket value of only $9 billion when she left.
The latest top 10 list, based on Wednesday’s closing prices, includes six former publicly-owned companies; Telecom, Contact Energy, Auckland International Airport, Vector, Port of Tauranga and Air New Zealand.
It could be argued that only Fletcher Building and Ryman Healthcare operate in a truly competitive environment as SkyCity owns a monopoly casino in Auckland and SkyTV has created its own monopoly because of weak competition [Gaynor forgets that Fletcher’s got its start as the government’s state house builder with a government guarantee on its debt].
These top 10 sharemarket value figures show that New Zealand businessmen and women have lost the ability to create great companies and the domestic sharemarket is now heavily reliant on former publicly owned organisations.
The National Government’s partial privatisation proposals will be a huge boost to the NZX, but these are one-offs. After the float of Mighty River Power, Meridian Energy, Genesis Energy and Solid Energy, it is conceivable that eight or nine of the NZX’s 10 largest companies will have their origins in the public sector.
The NZX badly needs more private enterprise established companies because these usually have better international growth prospects than privatised organisations.
Unfortunately our private sector originated businesses participation in the top 10 largest company list has declined:
* In December 1986, all of the top 10 companies originated in the private sector and had a total sharemarket value of $20,712 million.
* Thirteen years later seven of the 10 companies started in the private sector and had a market value of $13,044 million.
* Today, only four of the top 10 have a private sector background and their sharemarket capitalisation is just $10,866 million.