The main contributors to migration in 2014 were China, India, Britain and the Philippines, with big growth in student numbers.

New Zealand is an extremely popular destination as far as migrants are concerned.

This is clearly evident from the latest permanent and long-term arrival statistics which show the country had a record net migration inflow of 50,922 in 2014. This compares with an average net migration inflow of 13,300 per annum over the past 20 years. The 2014 figure comprised 109,317 permanent arrivals minus 58,395 departures.

The accompanying table shows the net migration figures over the past four years with countries ranked according to their net contribution in 2014. The net migration figure has improved dramatically for a number of reasons including:

The slowdown in the Australian economy, plunging the net outflow across the Tasman from 38,796 in 2012 to just 3,797 last year. The Australian mining sector has slowed and our neighbour’s unemployment rate is 6.2 per cent compared with only 5.4 per cent in this country. Movement across the Tasman is continuing to slow dramatically with New Zealand recording a net migration inflow of 321 from Australia in the December 2014 quarter.

There has been a significant increase in the number of foreign students with 22,863 arriving last year compared with 15,765 in 2011. The largest net migration contributors last year were India, China, Britain and the Philippines in that order.

Migration from these countries have a number of characteristics. 75.1 per cent of migrants from India were on a student visa, 8.6 per cent on a residence visa, only 8.2 per cent on a work permit, and almost 74 per cent were male.


45.5 per cent of permanent arrivals from China were on a student visa, 25.6 per cent on a residence visa, 13.9 per cent had a work permit, and only 46.6 per cent were male.

3.8 per cent of arrivals from the UK were on a student visa, 13.3 per cent on a residence visa and 44.8 per cent on a work permit. Nearly 40 per cent had professional or trade qualifications with only 2.1 per cent classified as labourers.

30.6 per cent of Philippines migrants were on a student visa, 14.8 per cent on a residence visa and 45.1 per cent on a work permit. Just over 26 per cent had professional or trade qualifications while 8 per cent were classified as labourers.

These migration figures, and 2013 Census data, clearly show that the country’s population is undergoing a significant change.

The strong migration figures, including the departure of a large number of New Zealanders to Australia in recent years, means that 25.2 per cent of people living in New Zealand were born overseas compared with 19.5 per cent in 2001.

The 1961 Census showed 92 per cent of the population was European, 7 per cent Maori and 1 per cent other descent, while in 2013 these figures were 74 per cent, 15 per cent and 11 per cent respectively.

In 1961 the three major sources of overseas born people were England, at 45.7 per cent of the total, Scotland (13.9 per cent) and South Africa (10.5 per cent). Those figures are now England (21.5 per cent), China (8.9 per cent) and India (6.7 per cent).

One of the country’s biggest challenges is that new migrants from China and India prefer to settle in Auckland whereas the English and Scots spread themselves throughout the country.

This has put increasing pressure on Auckland as 39.1 per cent of all overseas born people now live in our largest city compared with 37.0 per cent in 2006. Auckland has a major challenge to provide the housing and infrastructure to support the large population inflow into the city.

Listed law firms

The listing of three law firms – Slater & Gordon, Shine Corporation and IPH – on the ASX raises the question why there has been no legal IPO in New Zealand. This represents a missed opportunity for ambitious New Zealand legal services providers because the clear message across the Tasman is that investors are keen to invest in service companies, particularly law firms.

Slater & Gordon’s 2007 IPO was a world first for a traditional legal entity. The firm was founded in 1935 by William Slater and Hugh Gordon to service the needs of union members. By the mid-2000s its main focus was on personal injury claims, commercial disputes, family law and large class actions.

In August 2007 it released a prospectus for the issue of 35 million shares at A$1.00 each, with A$17.7 million going to the company and $17.3 million to existing shareholders, who retained 60.2 million shares, and 12.5 million shares were issued to staff.

Thus, the company had 107.8 million shares giving it a sharemarket value of A$108 million at the $1.00 a share IPO price.

Slater & Gordon has expanded rapidly, and the company reported normalised net earnings after tax of A$63 million for the June 2014 year compared with just $5.1 million in the year prior to ASX listing.

It now has 208 million shares on issue, a share price of $6.71 and a market value of A$1400 million ($1477 million), way above the A$108 million IPO value eight years ago.

Shine Lawyers was established in Queensland in 1976 with a highly specialised focus on damages based plaintiff litigation.

In March 2013 it issued a prospectus for the sale of 45 million shares at A$1.00 each, comprising 15 million new shares and 30 million existing shares sold by shareholders. These shareholders retained 110 million shares giving the company a total of 155 million shares on issue and an IPO value of A$155 million.

Shine’s share price has increased from A$1.00 to A$2.92 and it now has a market value of A$500 million.

IPH, the holding company for Spruson & Ferguson, was founded in Sydney in 1887 specialising in intellectual property. It provides services in Australia, New Zealand, Papua New Guinea and the Pacific Islands from Sydney, and also has a Singapore office.

IPH issued a prospectus in October 2014 for the sale of 79.1 million shares by existing shareholders at A$2.10 each with only 56,571 new shares issued. Existing shares retained a 49.8 per cent shareholding. Post listing, IPH had 157.8 million shares on issue giving it a total value of A$331 million at the $2.10 a share IPO price.

IPH’s share price has risen to $4.24 in less than three months and it now has a sharemarket value of $668 million. Existing and new IPH shareholders have done extremely well from the company’s IPO.

Meanwhile, the Australian Financial Review reported this week that Davies Collision Cave and Philips Ormonde Fitzpatrick, two intellectual property and patent law firms, have sought external advice on listing options.

The service sector offers attractive investment opportunities, particularly following the contraction of manufacturing and other traditional industries. We need more service companies listed on the NZX and Australia has demonstrated that investors find well-performing law firms particularly attractive.


Brian Gaynor

Portfolio Manager

Disclosure of interests: Milford Asset Management holds Slater & Gordon and Shine Corporation shares on behalf of clients.