Dec. 13 (Bloomberg) -- Trade Me Ltd., New Zealand’s version of EBay Inc., won’t be immune to the European financial crisis as consumers curb spending amid a darkening outlook, according to its chief executive officer.
The online auction and classifieds company, which began trading on the local exchange today, plans growth even as it boasts more than half the nation’s population as users, Jon Macdonald said in a telephone interview. While that may be affected by global economic events, the company expects online trading to be resilient, he said.
“I am a little concerned about New Zealand’s economy and consumer sentiment,” said Macdonald. “What happens in Europe will have a flow on to us. That said, within that context, I am very confident about the strength and growth of online retail.”
The 12 year-old company sold shares as latest figures showed a drop in New Zealand card spending at retailers and a fall in consumer confidence to its lowest since May. That added to signs that domestic demand has slowed as concern mounts that Europe’s sovereign debt crisis will restrain growth.
Trade Me raised NZ$363.5 million ($277 million) from an initial public offering after owner Fairfax Media Ltd. sold 34 percent of the company. It will have a market capitalization of about NZ$1.07 billion based on a NZ$2.70 offer price per share, trading as high as NZ$2.93 in Wellington today.
The company’s immediate objectives are domestic growth by encouraging users to transact more online, including through mobile phones and tablets, Macdonald said. Long-term options may include targeting off-shore markets that haven’t yet succumbed to EBay, he said, citing eastern Europe and the Middle East as potential regions.
“The more we can bring on board new suppliers and new buyers, new customers, the better positioned we’ll be,” he said. “If we do a good job of that, we can be largely insulated against those broader economic effects, but obviously not completely immune from them.”
Trade Me was formed in 1999 and bought by Fairfax for NZ$700 million seven years later. It was the first major acquisition by then Chief Executive Officer David Kirk and now has more than 2.8 million members. Kirk, who was captain of the first New Zealand All Blacks rugby union team to win the World Cup, is Trade Me’s non-executive chairman.
--Editors: Malcolm Scott, Iain Wilson
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