New Zealand’s sell-down of state-owned energy companies would gross about $6.8 billion, provided investors agree with the latest valuations by investment banks and research houses.
The valuations, published on the Crown Ownership Monitoring Unit website, are about $2 billion higher than the stock exchange operator, NZX, had assumed in its review of its index methodologies, which was announced last month.
Forsyth Barr valued Solid Energy at $1.69 billion, Macquarie valued Genesis Energy at $1.76 billion and Meridian Energy at $6.53 billion, while First NZ Capital valued Mighty River Power at $3.63 billion for a total of $13.61 billion. The government plans to sell down its holdings to around 50 percent.
It also aims to reduce its stake in Air New Zealand to about 50 percent from 75 percent, which would net the government some $220 million based on current pricing. That would leave the newly listed companies accounting for almost 6.4 percent of the NZX 50 Index’s market capitalisation.
The NZX is currently seeking feedback on plans to change the weightings of companies in the benchmark index to ensure it doesn’t become ‘less investable’ because of the amount of stock retained by the government and not available for trading. Its existing methodology was introduced in 2003, with further adjustment aimed at ensuring no single company dominated the index.
While the full details of the adjustments are complex, it boils down to approximately $3.5 billion, or 9.1 percent, of the NZX 50’s market value of $38.3 billion being due to the modifications, according to an NZX report last month.
The 2011 valuations are largely unchanged from a year ago, though Solid Energy’s independent valuation is almost half what the coal miner’s board thinks it is worth in the SOE’s statement of corporate intent.
Including the Air New Zealand sale, the government would reap $7.03 billion from its asset sale programme, the top of the $5 billion-to-$7 billion range it flagged last year.
Such a figure would net investment banks about $127 million in fees if they get the same percentage as when Contact Energy was privatised in 1999, which is broadly in line with the $100 million indicated by State Owned Enterprises Minister Tony Ryall last month.
Mighty River is poised to be first off the rank with a sale expected in the third quarter of this year, and Genesis will likely be the second company partially privatised.
The sale programme will get legislative sign-off as part of the supply and confidence deal with United Future, which will remove the companies from the State Owned Enterprises Act and set a cap on the Crown’s level of ownership and how much a single entity can buy.
Corporate iwi investors are likely to join institutional investors such as the New Zealand Superannuation Fund, Accident Compensation Corp’s investment portfolio and KiwiSaver funds when the allocations are determined.
The government will be the only investor allowed to hold a shareholding bigger than 10 percent.
(BusinessDesk)
11 Comments
By the third quarter of this year the Iran Gulf war will likely be in full swing...chch will have had another reminder that nature does not listen to "experts" and the ratings liars will tell English to stop the splurge or face a downgrade....the fiscal hole will be deeper and the "surplus" talk will be lost in a flurry of spin...Bollard will have the OK from the banks for his OBR game and the building sector will still be in decline...
Meanwhile the idiots that approved the 14% pay rise for the CCC CEO will be looking at losing their council seats. Winston will have a new sign to wave about..."Yes err I mean NO" and the Bluechip saga will enter a second decade or legal tennis.
Overseas the BS hiding the farce that is the EU and the euro piigs joke will cover the whole region in recession and the screaming trots. The "recovery in our time" fluff currently doing the media rounds from the usa will find Ben doing QE3 ....or is that 4!
Oh and oil will be a tad more costly due to a small matter of a full scale war going on but not declared of course. Just be glad you are not an Iranian naval rating....
Put your faith in the fools behaving like idiots Walter...until the IMF steps in to show English how to run an economy....( into the ground)
The much promised fiscal surplus will be 'delayed' and we both know why. The building sector will not reverse course...more shrinkage to come..thankyou My English didn't you do well with the gst rise...the paye 'savings' are frittered away by debasement. The chch rebuild is being put back as logic suggested it would be considering the propensity for endless wobbles...like maybe a decade!
So who is building?....well of course the make work splurge by central govt on borrowed loot is in full swing...and you thought the borrowing would decline...mug. Come the 23rd the resealing of the newly resealed highways game will be on again...great way to ensure the construction companies can grab a fistful of state dollars (borrowed) "make work" to you and me...you are paying!
Oh and not to forget..the stupendous idiocy of the CCC in awarding a 14% pay rise to one flunky who has never worked so hard in his life..doh...this will serve as the goal line for every other idiot council. There isn't a CEO in the country not ordering a brand new car on the back of an expected 14% pay rise....for the same job.
It is a mystery to me, why governments of this world are still running ambitious, megalomaniac programs/ plans with money which isn’t available. Trade- currency wars and the end of globalisation will do enormous damage to economies and societies will suffer, because of mismanagement of government, greed, corruption, neglecting of inequality, Climate change issues, etc. – the list of negative events is almost endless.
…and yes Wolly you are right sheepishly as we can see here - people accept that crap.
Check the graph - current demand bottom left and then add in a likely recession and probably lower dollar.
I'm keeping an eye on this - very likely an elaborate scam, but if not a game changer in electricity generation, which would make the real value of the electricity SOEs moot.
This is like a real estate agent telling you to sell your house with them - its will be worth heaps.
Then midway through marketing and after the wife has made you go unconditional on a house bigger than the jones down the road, the agent says the markets changed, other factors are at play you will have to lower it by 15% to sell it, he's really sorry, but still gets a massive commission...
You wait, these assets won't get close to this or last years valuations...
Expect - Minority discounts (20-30%), Liquidity issues, NZ currency//market risk and all the big banks and funds having a great time manipulating the price for their own gain.
This whole thing is a massive piece of fraud committed against the people of NZ. They should never be sold.
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