November 8, 2017 / 8:36 PM / 4 months ago

UPDATE 2-Xero to de-list from NZX in 2018, focus on Australian listing

* Xero to de-list from NZX in 2018

* Firm will consolidate its existing ASX listing

* Announcement a “shock” - fund manager (Adds fund manager and investor comment, market reaction)

By Charlotte Greenfield

WELLINGTON, Nov 9 (Reuters) - Accounting software firm Xero said on Thursday that it would delist from the New Zealand stock exchange in February, as it seeks to focus on its listing on the Australian bourse.

Xero said its last day of trading on the NZX would be Jan. 31 and it would formally delist on Feb. 2, following which its shares would be transferred to the Australian Securities Exchange where it is already listed.

The news that NZX would lose one of its most high-profile listings drove its shares down 2.5 percent to a two-month low.

“Everyone’s very surprised and very disappointed, it’s been a bit of a shock to the market here today. It’s not anything anyone expected,” said Brian Gaynor, head of Milford Asset Management in Auckland.

While Xero is headquartered in the New Zealand capital of Wellington, the firm gets 80 percent of its revenue from elsewhere and says it wants to focus on consolidating its Australian listing to support its drive into global markets.

“Our strategy is to drive further growth in markets like UK, North America and Southeast Asia,” CEO Rod Drury said in a statement. “As Xero continues to grow, gaining enhanced access to deeper capital markets, increased liquidity and a broader base of potential investors is critical.”

But some investors said they were confused by the reasoning.

“I think most investors are scratching their heads, trying to make sense of it and it’s not obvious as to why,” said Matthew Goodson, director at Salt Funds Management in Auckland, a Xero investor.

“When we look at it there’s no sense Xero’s been undervalued or underexposed on the New Zealand exchange,” he added.

Xero shares fell as much as 6.4 percent and were last trading down about 2 percent.

Earlier in the day, the company reported a narrower net loss after tax of NZ$21.1 million ($14.7 million) for the six months ended September, from a loss of NZ$43.9 million a year ago. ($1 = 1.4393 New Zealand dollars) (Reporting by Charlotte Greenfield; Editing by Robin Pomeroy and Himani Sarkar)

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