Meridian share offer likely by early November

Prime Minister John Key today confirmed the Meridian Energy share offer would be concluded and the company listed on the New Zealand sharemarket by early November, subject to market conditions.

“The Meridian share offer – the second in the Government’s Share Offer programme – comes after we successfully floated 49 per cent of Mighty River Power in the first half of this year, hitting our target of an 85 to 90 per cent New Zealand shareholding, and retaining majority Government control,” Mr Key says.

“And the Government remains committed to 85 to 90 per cent New Zealand ownership on the Meridian share offer.”

He expects Mighty River Power, and now Meridian Energy, will benefit from a broader shareholder base, and end up being better, stronger companies for the rigour and transparency that being listed on the sharemarket brings.

“Both companies will also be better off because they will be able to access capital to grow in more ways than companies that are 100 per cent government owned – which is basically from the taxpayer.”

He says the share offer programme is aimed at freeing up between $5 billion and
$7 billion to invest in other public assets for New Zealand and New Zealanders.

“The partial sale of Mighty River Power put $1.7 billion into the Future Investment Fund – and that is money we have been using to buy public assets without having to borrow on overseas markets.”

Mr Key says it should be remembered the whole Government Share Offer programme covers less than 3 per cent of the Government’s total assets.

“It’s smart reinvestment. With so many demands on government funding, these companies can get investment from sources other than just hard-working taxpayers, and taxpayers can get money freed up for spending on other priority projects that they will benefit from.”

Mr Key says he is confident New Zealanders will understand the instalment receipts model being used for the Meridian share offer, which will involve them paying for their shares in two instalments.

“It is not an uncommon model with large share offers. I think New Zealanders will view the ability to pay around 60 per cent of the share price at the time of the IPO and receive full benefits for the first 18 months as a positive feature of this offer.”

He says listing up to 49 per cent of Meridian Energy will also give New Zealanders the chance to invest in another big Kiwi company at a time when many people recognise the value of diversifying their growing savings away from property and bank deposits.

As at June this year, New Zealanders held around $118 billion in bank deposits – around 20 times the expected size of the entire Government Share Offer programme.
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