NZ plans to list Genesis Energy in April after partial sale aimed at increasing pricing tension, English says
By Tina Morrison
Feb 26 (BusinessDesk) – New Zealand’s government will sell down 30 to 49 percent of its holding in Genesis Energy and
list the power company on the nation’s share market in April, marking the end of its spate of partial asset sales over
the past year as a general election looms.
Genesis shares will be priced at the start of the initial public offer period in March, in what is known as a front-end
bookbuild, Finance Minister Bill English said in speech notes for delivery in Auckland today. That will provide more
certainty for investors and allow sharebrokers to bid for the stock at the same time as institutional investors,
creating stronger competition, English said.
New Zealand’s government has previously said it expected to reap between $700 million and $1.1 billion from the sale of
49 percent of Genesis, following on from last year’s partial privatisation of MightyRiverPower and Meridian Energy, and
a reduction in its holding in national carrier Air New Zealand. So far, the government has raised about $4 billion,
reducing its overseas debt requirements and helping fund schools, hospitals and faster broadband, English said today.
“The government won’t be selling any more shares in state-owned enterprises or mixed ownership companies – either this
term of after the election,” English said, reiterating earlier comments by Prime Minister John Key. “We’ve achieved what
we wanted to with the share offers in energy companies and Air New Zealand.”
The remaining state-owned enterprises are a combination of small entities, natural monopolies or companies in sectors
that are unsuitable for future share offers, English said.
The government anticipates that selling a smaller stake in Genesis in a front-end bookbuild could increase the price by
offering fewer shares to more bidders, English said. A decision on how much of the company is to be sold will be made
ahead of the offer.
Genesis is the country’s largest power company by customer numbers but the smallest of the partial privatisations by
asset value. New Zealand retail investors in Genesis will be offered loyalty bonus shares and a simpler investment
statement detailing the offer, English said.
MightyRiverPower listed in May at $2.50 and recently traded at $2.06. Meridian’s instalment receipts listed in October
at $1 and recently traded at $1.055.
Last week, Genesis reported a 23 percent slide in first-half earnings to $150.5 million, reflecting stiff retail
competition and a warm winter, which meant hydro-storage was above average and wholesale prices were lower.
The partial privatisation programme has had mixed success after an opposition proposal to overhaul the electricity
market saw traders discount the value of the power companies, accompanied by growing recognition that New Zealand has
excess generation capacity that may last some years, keeping a lid on prices.
A general election has to be held this year.
(BusinessDesk)