Retail investor registrations close; MightyRiver float just a week away
By Pattrick Smellie
May 3 (BusinessDesk) - New Zealand's first public offer privatisation of the 21st century is a week away, with registrations from individual New Zealand investors closing at 5pm ahead of next week's book-build, following by listing on the NZX and ASX next Friday.
No details will be released of the number of registrants. Some 440,000 New Zealanders requested the 260-page prospectus offering shares in MightyRiverPower in a likely issue range of $2.35 to $2.80.
One energy equities analyst, Nick Lewis at Woodward Partners, put a $2.60 price on the shares in research published this week, in spite of the spike put into the process by the announcement of the Labour and Green parties' intention to strip value out of the electricity industry to fund lower power prices for all consumers.
The next phase is a so-called "book-build" in which local and foreign institutional investors, including KiwiSaver funds, the New Zealand Superannuation Fund, Accident Compensation Corp, and a slew of private pension and savings funds, will bid for entitlements to blocks of shares.
“They bid for shares at the price/s they consider the company is worth," said State-Owned Enterprises Minister Tony Ryall in a statement. "It is a competitive process.
"While the final decision is made by Ministers, the bookbuild process allows us to determine what value the market puts on the company. This is important for ensuring New Zealand retail investors get a fair deal – and New Zealand taxpayers get a fair price."
Ministers will assess all of the demand mid-week and finalise price and allocations.
"The same price is paid by everyone, although New Zealanders in the retail offer will have an extra entitlement to loyalty bonus shares," said Ryall.
“We expect to announce those decisions before the listing on the NZX Main Board on Friday 10 May (initially trading on a conditional trading basis)."
NZX chief executive Tim Bennett said the MRP float was "critical for the development of New Zealand's financial market It'll bring in the next generation of retail investors."
Bennett today reported a 54 percent increase in share trading on the NZX in the first quarter of this year, compared to the same time a year ago, as investors turn back to higher risk equities to get better returns than in debt markets, where interest rates are at historic lows around the world.
The Labour-Greens policy announcement is expected to have dented appetite for the float, which the government hopes will raise around $1.5 billion through the sale of 49 percent of MRP, with the Crown remaining majority owner and restrictions on building stakes above 10 percent.
In a Radio New Zealand interview, former chairman of the Capital Markets Development Taskforce Rob Cameron nominated 150,000 retail investors as a strong result.
The Opposition parties' policy is opposed by peak business lobby groups, including the Major Electricity Users Group of heavy industrial power users, whose members would stand to gain from lower prices promised by the reforms.
The Labour-Green proposals would dismantle more than 25 years' effort to create a working electricity market in New Zealand and return to a centrally planned system in which a government agency would simultaneously set prices, regulate the market, and decide when to build new generation capacity.