Clayton Cosgrove
Spokesperson for SOEs

9 April 2013

MRP brokers get commission doubled if shares sold offshore

The Government’s three major brokers will get their commission doubled if they sell shares to overseas investment companies rather than New Zealand institutions, says Labour’s SOE spokesperson Clayton Cosgrove.

The Mighty River Power share offer document says the joint lead managers, Goldman Sachs, Macquarie and First NZ Capital, will get 0.4 per cent commission for selling shares to New Zealand institutional investors but get 0.8 per cent commission for share sales to overseas institutional investors.

Clayton Cosgrove says: “National keeps telling us they’re putting New Zealanders at the head of the queue. As usual it looks like they’re being economical with the truth.

“The three priority brokers will get twice the commission if they sell shares to overseas investors rather than New Zealand institutions.

“The brokers at Goldman Sachs, Macquarie and First NZ Capital aren’t stupid. They will put all their effort into selling the shares offshore so they can double their return.

“John Key has assured New Zealanders that 70 per cent of Mighty River Power shares will remain in New Zealand hands. But we now find out he’s providing double the incentive for brokers to sell shares offshore.

“With the massive risks surrounding the sale becoming apparent with Tiwai Point, the Government is worried that Kiwis will run scared. National’s sole concern is getting a good price for the sale, that’s why they’re encouraging brokers to sell more shares overseas to keep the price up. That puts more shares in foreign hands.

“We all know that eventually most of these shares will end up overseas. The Government’s nonsensical policy appears designed to hasten that outcome,” says Clayton Cosgrove.

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