NZ asset sell off would see no more than 15% in foreign hands, Govt says
By Pattrick Smellie
Aug 31 (BusinessDesk) – The government expects partly privatised state-owned enterprises will have no more than 10% to 15% foreign ownership, and no one investor will be allowed to own more than 10% of an SOE’s shares.
SOE Minister Tony Ryall told a high level investment conference in Wellington the combination of strong appetite for shares from New Zealanders and the fact the government would keep a controlling 51% stake in any part-privatisation would limit the role of foreign investors in the sale of shares in up to five SOE’s.
“Overseas investors will play a role in helping to get a good price for taxpayers,” said Ryall, in a speech delivered on Finance Minister Bill English’s behalf to the Institute of Finance Professionals. “They will also help deliver a robust and liquid market for New Zealanders.
“But it's important to remember that these companies will remain firmly - and overwhelmingly - in New Zealand control. Across the programme New Zealanders will own at least 85 to 90% of these companies - including the government's cornerstone shareholding.”
A maximum shareholding cap on part-privatised SOEs would also be imposed, “most likely” set at 10%, said Ryall.
The government’s plan first requires its re-election in November and involves selling down to 51% government ownership in three electricity companies: Genesis Energy, Meridian Energy, and MightyRiverPower; the state coal company Solid Energy, and Air New Zealand, the last of which has been managed as a government-controlled NZX-listed company for the last decade.
The programme is intended to raise between $3 billion and 7 billion and may take five years to complete.
The government’s confidence in New Zealanders’ appetites for the shares derived from a mixture of low interest rates making bank deposits less attractive, strong demand for corporate bonds in the last two years, and a growing savings culture as the lessons of the global financial crisis sink in.
Even at $7 billion, total proceeds from the proposed sales were only a small proportion of the $300 million of investments New Zealanders already own, beyond their own homes, said Ryall.
KiwiSaver schemes managed around $9 billion in investment funds already, and that figure was predicted to double in the next four years, New Zealand financial institutions had around $59 billion of funds under managements, and Crown financial institutions including the ACC and NZ Super funds had nearly $40 billion in funds under management and iwi had an estimated $10 billion of assets.
Ryall said the sales were justified because of the country’s wider infrastructure, social and other needs that governments would expect to fund.
Partial privatisations would reduce government borrowing needs.
“We would rather pay dividends to New Zealanders than interest on rising debt to foreigners,” he said, saying claims the government was selling the family silver were “rubbish”, when the Crown expected to spend $78 billion on new government-owned assets over the next five years, before depreciation.