Genesis Energy float timing soon, says Key
Feb. 3 (BusinessDesk) – The government has received advice saying the partial privatisation of Genesis Energy is achievable in current market conditions and a decision on timing is expected “soon,” Prime Minister John Key says.
The largest of the ‘big four’ electricity company by customer numbers, but the smallest by asset value, Genesis is the last to be lined up for sale of up to 49 percent of its shares to private investors, with the government committed to between 80 and 85 percent of those shareholders being New Zealand private or institutional investors.
A Genesis float in the first half of this year was confirmed after Meridian Energy floated in late October, but speculation in the investment community suggests a float will occur sooner rather than later.
“Soon,” Key told journalists, when asked when a decision on float timing would be made. “Senior Ministers were talking about that last week.
“I’m very much of the view it’s going to take place. I saw some advice last night that indicated a sale is definitely a possibility and Treasury were confident we could do it.”
That was despite lacklustre share price performances by both MightyRiverPower, floated last May at $2.50, but was trading late today at $1.965. Meridian instalment receipts listed at $1 in late October and were trading late today at $1.01.
However, Key said the power companies were “reasonably high dividend stocks assuming they stick to their dividend programme.”
“At the end of the day, things are worth what the market will pay for them. I don’t think the dynamics are going to change around the electricity sector so they’re a known commodity. But in my view, the mixed ownership model (partial privatisation) programme has been the right thing to.”
It had helped keep government debt down while allowing investment in other new assets and would improve the management of the power companies.
Key also doubted it was a major election year issue.
“It was the big issue of 2011. It’s not really the big issue of 2014,” he said.