Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Mighty River – uptake down, real estate love affair unbroken

News release

3 May 2013

Mighty River Power – uptake down, prices down, real estate love affair unbroken


Peter Sherwin, Grant Thornton New Zealand Partner, Privately Held Business, looks at the ramifications of the Mighty River Power asset sale which closes today


With applications for Mighty River Power (MRP) closing at 5pm today, a straw poll around the office indicates that the uptake on MRP shares will be lower than the Government first planned.

And if this comes true the sabre rattling by the Greens and Labour may have wiped as much as $400m off the value of the MRP listing by damping the enthusiasm of small investors.

Potential investors may now hold back due to confusion about the future of the power industry, uncertainty whether MRP will stag at a higher price and a fear the price will go down upon listing.

The lack of take up will dampen the listing price, which is more likely to be at the lower end of the scale, around $2.25 rather than the expected $2.80.

The Greens and Labour may have scored political points, but effectively they have slashed the Government’s cash investment to fund health, education and infrastructure programmes.

It will also ensure the Government’s desired “second investment front” remains unopened thereby leaving intact New Zealand’s love affair with the non-productive real estate sector.

So who pays the price for the opposition’s political gain? Every Kiwi, even those they claim to champion.

Professional and institutional investors will not be daunted by any of this and are making big offers, but with fewer "mum and dad" buyers they may not have to go to the market for as many shares when they are listed on 10 May 2013.

This is not panning out the way the Government envisaged and may spook their confidence for future asset sales although reports from The Wall Street Journal suggest the Treasury has called for investment banks to tender for leading roles in the partial privatisation of Meridian Energy and Genesis Energy.

Early trading on 10 May 2013 will be watched keenly by politicians, investors and mums and dads alike for all sorts of reasons and not everyone is going to end up happy…..but just which group is going to be disappointed is the billion dollar question.


ENDS


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Burgers To America: BurgerFuel Opens In The USA

BurgerFuel Worldwide are excited to announce the opening of their first USA based restaurant in Indianapolis, hot off the back of the Indy 500. More>>

English On Budget: Businesses Over-Egg Corporate Tax Cuts

Cutting New Zealand's 28 percent corporate tax rate is "not a panacea in the way business groups sometimes market it," says Prime Minister Bill English. More>>

ALSO:

Auckland Port To Recapture Gas: Union Calls On Ports To Stop Spewing Methyl Bromide

The Maritime Union of New Zealand welcomes the decision by Ports of Auckland to stop releasing methyl bromide emissions into the air. The move to fully recapture the toxic gas after fumigation sets a new benchmark for industry best practice. More>>

ALSO:

Retail: Banks Shoes Calls In Receiver

Banks Group, which runs 14 stores across the country under the brands including Banks Shoes and Shoe Connection, has been tipped into receivership at the request of director John Bank. More>>

ALSO:

NZ's Space Programme: Rocket Lab Makes It To Space (But Not Orbit)

Electron lifted-off at 16:20 NZST from Rocket Lab Launch Complex 1 on the Mahia Peninsula in New Zealand. It was the first orbital-class rocket launched from from a private launch site in the world. More>>

ALSO:

Earlier: