Budget Confirms Meridian the Next to Float Under Mixed Ownership Model Programme
Healthy domestic capital markets key to economic growth
The continuation of the mixed ownership model (MoM) programme will stimulate New Zealand’s capital markets and
contribute to economic growth, according to Deloitte Corporate Finance Partner Andrew Hirst.
Today’s announcement that Meridian Energy will be the next initial public offering to proceed under the Government’s MoM
programme, following on from the listing of Mighty River Power last week and despite a few hurdles in the process, is
welcome news to domestic capital markets.
The Government has pointed to a number of benefits from the MoM, including greater efficiency and transparency on behalf
of the SOEs being sold down, and raising $5-7 billion to pay down debt while freeing up capital for reinvestment in
infrastructure. This still appears to be on track after raising $1.7 billion from the Mighty River Power float and
despite Solid Energy likely to drop out of the mix.
“But arguably the most important outcome from pursuing the programme is the much needed boost it will provide to our
domestic capital markets, with total market capitalisation of the NZX expected to increase between 10 and 20 percent
post the MoM programme,” says Mr Hirst.
Capital markets are a key determinant of New Zealand’s economic performance. A healthy domestic capital market will
provide another alternative investment avenue for savings other than residential housing and create less reliance on
term deposits, bonds and international equities for both domestic private investors as well as the domestic fund
managers, Kiwisaver, the NZ Super Fund, etc.
“The reality is that without completing the MoM programme through the partial sell-down of these SOEs, the New Zealand
equity capital markets will continue to struggle for relevance and critical mass, making much needed economic growth
harder to achieve,” concludes Mr Hirst.
ENDS