NEW ZEALAND Law and Practice Contributed by: Ben Paterson, Cath Shirley-Brown and David Hoare, Russell McVeagh
equity fund shareholder. Notwithstanding the forego - ing, while not overly common, MIPs will sometimes preclude management from tagging in the event of an exit by the majority private equity fund shareholder. Drag rights apply to all shareholders; however, tag rights generally only apply to institutional co-investors. 10.3 IPO The COVID-19 pandemic (and resulting market dis - ruption and uncertainty) reduced IPO activity. This remains the trend in 2025, given current market uncertainty (see also 1.2 Market Activity and Impact of Macro-Economic Factors ). The market remains cautious, and there has not yet been any meaningful increase in capital markets activity.
Voluntary escrow arrangements – and, in certain circumstances, mandatory escrow arrangements enforced by the NZX – are almost always a feature of exits undertaken by way of an IPO. These escrow or “lock-up” arrangements may allow for a partial release of shares from escrow after the company’s results are announced, and generally will be effective for a period of 12–24 months from the listing date. Where not mandatory, investment banks advising on the IPO will typically advise that, from a pricing and marketability perspective, it is preferable for the pri - vate equity seller to agree to some form of escrow or lock-up arrangement. Relationship agreements between the private equity seller and the target company are a typical feature. These relate, amongst other matters, to seats on the board of the company and information rights.
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