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

 


MightyRiverPower listing to lure unsatisfied offshore buyers

MightyRiverPower listing may lure more international investors on yield demand

By Tina Morrison

May 9 (BusinessDesk) -MightyRiverPower stock may be in demand when it lists tomorrow from international buyers who are faced with low yields in their own markets and didn't receive as many shares as they wanted in the government allocation.

As Europe’s economy shrinks and interest rates in the euro-zone, the US and Japan touch record lows, many investors are seeking opportunities outside their home markets. New Zealand's government yesterday said it had allocated foreign investors just 13.5 percent of state-owned MRP’s shares, after their applications were “scaled considerably,” according to SOE Minister Tony Ryall.

Some 86.5 percent of the shares will be New Zealand owned: 26.9 percent by New Zealand retail investors and 8.6 percent by New Zealand institutions, while the government retains a 51 percent holding.

"Global investors may be interested in buying a bit more," said Andrew Bascand, who helps manage more than $1 billion in equities at Harbour Asset Management. "They are quite attracted to this part of the world."

Shares in the state-controlled electricity generator and retailer will list on the NZX at 12.30pm tomorrow at $2.50 a share. Based on that price, the cash yield is 5.2 percent, said Bascand, whose funds participated in the share offer.

"For global investors, there aren't a whole lot of yields above 5 percent," he said. "Domestically, as the cash yield goes down from 5 percent there are many other competing opportunities that one could make."

Investors may turn to other energy stocks such as Contact Energy or Trust Power should sellers ask too big a premium for MRP, said Guy Elliffe, who helps manage $1.5 billion at AMP Capital Investors.

Some international investors may be driven by a mandate to invest in renewable energy, stoking demand for MightyRiverPower which produces more than 90 percent of its electricity from renewable sources, said Shane Solly, who helps manage more than $200 million at Mint Asset Management.

"I am not anticipating a huge sale of stock by private investors," said Solly, who participated in the offer. "It will come down to what international investors choose to do."

"Most have come in with less than what they bid for. There's been an element of people knowing that they would have to participate in the secondary market," said Solly who expects to be active in the stock.

International investors may have the largest impact on listing given previous experience with stock offerings in the Fonterra Shareholder’s Fund, News Corp's sale of its stake in Sky Network Television and Fairfax Media Group selling its Trade Me holding, said Rickey Ward at Tyndall Investment Management.

"There will be sufficient allocation to encourage local institutions to support the deal on listing," Ward said. "While we may have not received anywhere near what we would have liked, we have received a sufficient allocation to encourage us to participate."

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Auckland Port Study: Port To Ship Out – No Departure Date

Interest groups in Auckland and its waterfront chose a group of representatives to determine the future of the port. Their consensus is that the Port is going to have to move but not before a credible location is confirmed... More>>

ALSO:

Tax: GST Threshold For Online Purchases Won't Lower Before 2018

The government wants to lower the threshold on online purchases which qualify for GST from mid-2018, but says more work is needed and there will be no change without public consultation. More>>

ALSO:

North Canterbury: Government Extends Drought Classification

The government has extended a drought classification for the eastern South Island until the end of the year, meaning the area will have officially been in drought for almost two years, the longest period for such a category. More>>

ALSO:

Negotiations Fail: Christchurch Convention Centre Build To Proceed Without PCNZ

After protracted negotiations, the government has ditched the construction consortium it picked to build Christchurch's replacement convention centre, which it now anticipates delivering at least two years behind the original schedule. More>>

ALSO:

Other Centres' Convention Centres:

Ruataniwha: Greenpeace Launches Legal Challenge Against $1b Dam Plan

Greenpeace NZ is launching a legal challenge against a controversial plan to build a dam that’s set to cost close to $1 billion and will pollute a region’s rivers. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news