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Well-sourced Australian media reports suggest Mighty River Power share price will be NZ$2.60, raising NZ$1.78 bln for the state

Posted in News Updated

Australian media are reporting that the final share offer price for Mighty River Power shares will be NZ$2.60.

If this is the price achieved it will raise about NZ$1.78 billion for the Government.

This figure would be something of a disappointment put against earlier market expectations that the offer might raise about NZ$1.9 billion.

However, the Government is sure to acclaim it as an outstanding success when the wave of uncertainty caused by the launch last month of the Labour/Greens policy for a new singly buyer of electricity is taken into account.

The Labour/Greens policy caused an uproar and forced MRP to issue a supplementary disclosure statement.

The offer of shares to the general public closed last Friday.

The indicative price range was NZ$2.35 to NZ$2.80, although there was nothing to stop the final price being set higher or lower than that.

Although 440,000 Kiwis pre-registered interest in acquiring shares, veteran investment banker Rob Cameron, one of the key proponents of partial privatisations, suggested last week a figure of 100,000 to 150,000 might have actually applied.

The Government's said it won't give the numbers on how many applied till after the shares are listed on the NZX at 12.30pm this Friday.

The crucial part of the offer - that to institutional investors - has been taking place over the past two days. This process, the so-called book-build, is the way in which the final price is set depending on demand from the professional investors. The Government though does have the absolute final say.

The Australian Financial Review's prestigious "Street Talk" column, which tends to get a lot of investment bank-related information leaked to it, said today there had been strong institutional demand for the MRP shares. It said a final pricing decision would be made after meetings this afternoon.

Mighty River Power’s joint lead managers are First NZ Capital/Credit Suisse, Goldman Sachs and Macquarie Securities.

Street Talk said that while investors often do not show their hands until late in bookbuilds, early indications were that the deal was likely to be covered up to at least $NZ2.60 a share, which would give investors around a 5% dividend yield. 

It said that the international share offer, would be worth around $NZ400 million to $NZ500 million, with the bulk of the MRP share to be taken by Kiwi "ma and pa" investors and New Zealand institutions.

Assuming the Government has been able to raise NZ$1.78 billion from this share offer, it will be able to claim success - even though perhaps as much as NZ$2 billion might have been raised without the uncertainty injected by the Labour/Green policy.

The Government has targeted raising NZ$5-NZ$7 billion from sale of up to 49% of MRP, Meridian Energy, Genesis Energy and Air New Zealand, which is already listed on NZX. The money is earmarked for spending on new state assets.

The next key development from the Government perspective will be how well the MRP shares do once they list on the NZX - and also in Australia - on Friday.

A strong early listing price will bode well for the next projected partial privatisation, widely expected to be the biggest state power company Meridian Energy and probably before the end of this year.

Based on the valuation of its board last year, a partial sale of Meridian could potentially raise about NZ$3.2 billion. However, Meridian faces the huge uncertainty over what will happen to its biggest customer the Tiwai Point aluminium smelter, including the possibility that will be closed. It has been suggested that because of the large size of Meridian it may be sold off in two tranches.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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34 Comments

The Government has targeted

The Government has targeted raising NZ$5-NZ$7 billion from sale of up to 49% of MRP, Meridian Energy, Genesis Energy and Air New Zealand, which is already listed on NZX. The money is earmarked for spending on new state assets.
 
Before or after the election? And if after where will the funds be applied? 

Excellent news,  now we can

Excellent news,  now we can get on with the next one , and list another minority stake in the more SOE's . 
This exemplary  John Key - led National Government , which is going to get us back to surplus in the next 2 years,  will be  hailed in history as the British Tories were in the Thatcher years 

I guess we can anticipate a

I guess we can anticipate a Poll Tax proposal in the Nats mandate list for the 2014 election.

Good One Stephen , I

Good One Stephen , I enjoy the quick retorts we get on this forum,  and  I am quite impressed on how well informed New Zealanders are about UK Politics .
I hope we dont ever see the Thathcer Poll Tax, which she innocuously called the Community Charge ,  but you never know ,
Len Brown is despearate for more money for his pet projects
And only about 350 000 people in Auckland pay rates , thats close to one in five  persons , so a poll tax would make some sense as everyone would contribute something
 

I lived there for 17 years

I lived there for 17 years and my brother-in-law is a longstanding sub editior for the Telegraph.
 
Please note this gem

DH:Well-sourced

DH:Well-sourced Australian.......
do you mean drunk?
 

Geeeze thanks Boatman, you've

Geeeze thanks Boatman, you've just gave Len Brown an idea to raise more money for his train set.. No bout he'll call that his idea.

too funny Chairman..I gotta

too funny Chairman..I gotta go pee.

The Thatcher years can be

The Thatcher years can be seen now for what they were.
Thatcher arrived in Power to a Petro Economy that the benifits of which the Conservatives   and the subsequent labour  government squandered away.
Privatisations have been a disaster for Britain and a huge success for London. London had the Petro Pounds pourig through and the privatisations etc. Britain however was slowly kicked to death.
Funny though how  oil  and Thatcher are only now being seen for what they were a one off hit delaying the enivitable.

If it is indeed $2.60 from

If it is indeed $2.60 from the indicative price range of NZ$2.35 to NZ$2.80, then the issue and pricing can be marked as a fair success. Therefore:
A: The Labour/Green chatter and RIO hard ball antics have had no effect...
Or,
B: The issue has been effected, and the range price had been 10% to 15% below market value all along (remember wall of funds&Fonterra units)...
 
As with all great events/spectacles, its the after party /after market we should be thinking of...
...........like boxing day we can then see who got what present...
 

Re: Oz views: Savers

Re: Oz views:
Savers dependent on fixed interest have been poorly advised for decades, not just over the past year as interest rates have tumbled. The dividend flow from a boring portfolio of industrial stocks trounces fixed interest and whatever the best daily rate might be from the on-line banks.

Read more: http://www.smh.com.au/business/markets/how-shares-slaughter-term-deposits-20130508-2j6p1.html#ixzz2Sf0iPHdz

Yeah, but there will be a

Yeah, but there will be a back end capital payment or service charge - just as the average Yank knows to well - US treasury issues USD1.2 Trillion new debt annually - Federal Reserve QE's it. Bingo, higher stock prices and with cheap funding, higher dividends - how long can companies keep borrowing to pay the dividend.

Exactimundo, Henery.   It's a

Exactimundo, Henery.
 
It's a divvy flow straight into My pocket, not diverted, diluted, and generally foobarred in the process, via the grasping hands of Gubmint.

I prefer capital gains

I prefer capital gains myself, less paper work - still upset aapl introduced a dividend policy - sent the stock through the floor.

If this rumour is true, I

If this rumour is true, I understand why John Key was gunning so hard for Labour and the Greens yesterday- sounding like the last weeks of an election campaign. 100 to 150 000 of the 440000 preregistrations is a big comedown, and about half what people like Brian Gaynor were predicting earlier in the show.

That was always going to be

That was always going to be the case. So few people in New Zealand have spare cash for investment purposes. it's always claimed that ~200,000 lost ~$6.0 billion in the finance company debacle. I guess in this situation we are dealing with those that remained solvent, which inevitably will be the same family groupings.
 
Key's actions are not those of one who seeks the benefits of an egalitarian society despite his claims of sympathy with those experiencing similar indignities his mother endured during his council house upbringing.
 
The heralded ~440,000 preregistration # was a pre-arranged political stunt.

   "The heralded ~440,000

   "The heralded ~440,000 preregistration # was a pre-arranged political stunt..."
and the Labour Green bullshit referendum wasn't????

I believe one is a democratic

I believe one is a democratic right.
The Citizens Initiated Referenda Act 1993 allows for citizens to propose a referendum. These are non-binding referendums on any issue in which proponents have submitted a petition to Parliament signed by ten percent of all registered electors within 12 months. There were 3,070,847 on the electoral roll for the 2011 general election, so organisers would need to gather at least 307,085 signatures at the average rate of 842 signatures per day, although in reality, organisers would need to collect closer to 340,000 signatures to allow for variances in electoral roll numbers, duplicate signatures and signatures that cannot be matched to a registered elector. Read article
 
Did the Nats get an outright authority to sell the assets? Today's shenanigans suggest otherwise.

Labour/greens collected

Labour/greens collected about 100000 bullshit signatures .they claim 70%+ are against asset sales but they couldnt get 300000 to sign out of a pool of 2.15 million ?(they had 12 months and in excess of $100000 tax payer dollars to help them)
national had an election and won.  1.4M people thought it was a good idea..
pretty cut and dried really
 
 

Ok - why would anybody

Ok - why would anybody believe 440,000 NZers are capable of making an informed share market investment when at least 44% of them were recently considered to be living at best from payday to payday?  - hardly capable of paying the utility bill never mind purchasing the discounted value of the forecast dividend flow.

Of course many wont be

Of course many wont be informed, all many will have done is buy based on the greedy assumption that they can quickly on sell and make a packet.  At $2.50 a share it seems cheap to where Contact was.
regards

The people you talk of are

The people you talk of are probably not net taxpayers so dont really own any of MRP to start with.If thier kids get a new school out of the sale proceedes they they will class that as a win.
 

The people you talk of are

The people you talk of are probably not net taxpayers so dont really own any of MRP to start with.If thier kids get a new school out of the sale proceedes they they will class that as a win.
 
Do you think their parents or cohorts did not sweat for very mediocre incomes to build the power station edifices that account for MRP's most saleable assets.
 
Other than that words fail me.

lots of things fail you

lots of things fail you stephen...they borrowed most of the money which i have spent the last 20 years to try and help pay back.their parents had the best years this country had to offer and blew it.
 

So we should do away with

So we should do away with inheritance laws since the beneficiaries didn't earn it, all assets go strait back to the government so the they pay their debts or build new state houses, or whatever takes their fancy. 

careful ....they way Labour

careful ....they way Labour is going with renationalising stuff they might think it is a good idea

Well I have proposed such in

Well I have proposed such in a roundabout way. Wealth stripping, or cannibalising of wealth ala Cyprus is the name of the game going forward, so the options list will keep expanding.....

They actually got about 292k

They actually got about 292k verified against the electoral role signatures, actually needing 308k.  Seems grey power also played a significant part.....thats one voting block JK looks to be losing. 
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1088...
Taking in only 113k of the supposed 440k bought shares, or roughly 25% or roughly 300,000 ppl that didnt. Thats not even 1/2 the number of ppl who signed against the sale.
The mandate to sell is a bit of a stretch to say the least.
regards
 

Steven ..the mandate was the

Steven ..the mandate was the general election...25%of the petition signatures were fraudsters or didnt exist.Just cos those in favour of selling MRP didnt buy shares doesnt make them against.I bet thedirty politics regarding the LG renationaliaston proposal would have scared a few off.
Labour are hypocrates.one minute the didvends are important nek minute they are not.
They greens are as well(dont they really want power more expensive so we use less of it?)
As for the oldies..after being burned by dodgy finance companies those with retirement savings would love to have a blue chip investment to give them some security..no?
Evey winter the MSM will have a story of some old pensioner shivering in their flat cos power is too expensive..Now they can own the power company and get their own back...!

Your rant is  factualy

Your rant is  factualy floored there Don M...go read what the clerk actualy found and was directed to do by the GOVT Statistician....then come back and present your case .
 Just because John Boy says so in a sound bite,  does not make it so, unless your the gullible target  he aims for. 
16,500 wre either not ledgible or had signed more than once. patsy.

Didnt they collect 383000

Didnt they collect 383000 sigs? 74000 too many(need 309000)
came up 16500 short     actual 293000    so makes about 90000 bogus?
 
 

well said Count..   You know

well said Count..
 
You know when the likes of Don m  come out swinging like that, that the boys are hurting.
 
Sadly, if he had had more intelligent briefing, he'd have been able to pull Russel Norman's 'cheaper power' to pieces. I did. Wrote the man a heavy piece, told him cheaper prices were not going to happen, told him why, and why they shouldn't.
 
Funny to watch from an off-grid grandstand.....

are you able to put up the

are you able to put up the "norman piece" on your blog? or is it the same as your article?

something is floored

something is floored