10 May 2013

Foreign buy-up of Mighty River Power begins

National’s under-pricing of the Mighty River Power share float has cost the public millions, as retail investors sell up and the company slips further into overseas ownership, Green Party Co-leader Dr Russel Norman said today.

Mighty River Power’s share value has risen by over 10 cents, or 6%, today. That equates to a gain of over $65m for the private investors for a few hours’ investment. Over 50 million shares, 8% of the privately-held portion, have been sold already today. The trades are predominately small to medium size in volume, which suggests retail investors are selling up to overseas institutions.

“National’s under-pricing of the Mighty River Power shares has gifted a quick profit to finance institutions and the 2.5% of New Zealanders who bought shares. But there’s nothing to celebrate for Kiwi families who can’t afford to heat their homes,” said Dr Norman.

“National under-priced the shares so that the price would bounce up after listing. That ‘good news’ story came at the cost of tens of millions of dollars in reduced sale revenue to the taxpayer. The bill for this sale just keeps growing.

“The evidence is that retail investors are selling their shares in droves to make a quick return. The National Government should reveal how many of the 113,000 retail investors have already sold up.

“As retail investors cash up a quick profit at the public’s expense, more and more of the shares will be going into overseas ownership. Already, we’re seeing the company slip further out of Kiwi ownership.

“This is precisely what happened with the Contact Energy sale. Within months, 30,000 retail investors had sold their shares. Today, two thirds of the retail investors are gone and the company is majority owned by Australian company Origin Energy. There was no need to repeat that mistake.

“National gave 27% of the Mighty River shares it sold to overseas institutions, and now even more of the company is heading overseas. That does nothing to help New Zealand, it just means a greater outflow of profits in the future,” said Dr Norman.

ENDS

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