NZ Super Fund and Infratil raise NZ$840 mln through sale of 60% of Z Energy via float at NZ$3.50/shr; middle of range

NZ Super Fund and Infratil raise NZ$840 mln through sale of 60% of Z Energy via float at NZ$3.50/shr; middle of range

Infratil and the New Zealand Superannuation Fund have announced they will sell 60% of the shares in Z Energy for NZ$3.50 a share in an initial public offering on the NZX that will raise NZ$840 million.

The shares began trading at 11 am on Monday and the IPO price was set at the middle of a previously indicated range of NZ$3.25-NZ$3.75. The shares rose around 6% to NZ$3.72 in morning trade. 

Infratil CEO Marko Bogoievski said the market’s response "very strong across the board." 

“We received a strong response from the retail broker network, with their allocations requiring significant scaling," Bogoievski asid.

"We have also been delighted with the positive response from institutional investors, which we see as a validation of the New Zealand economy, the transport fuels industry, and the achievements of Z under our ownership," he said.

Infratil and NZ Super are selling the maximum 240 million shares of the 200-240 million they indicated they would sell in the prospectus.

“Our feedback suggests investors have been attracted to Z Energy’s cash flows, dividend outlook and range of potential future growth areas.” 

NZ Super Fund and Infratil will retain a combined 40% stake in Z, which they bought from Shell three years ago for NZ$696.5 million. This means they have made a significant profit over that period and still own a controlling stake.

New Zealand Superannuation Fund spokesman Matt Whineray said the 20% stake was still one of the fund's largest investments. The Infratil and NZ Super stakes cannot be sold until after the release of Z's results for the half year to September 30, 2014.

Whineray said the Fund would reinvest the proceeds in other investment opportunities in New Zealand and internationally. 

Z Energy is New Zealand’s first listed transport fuels distributor and is expected to be among the largest 20 New Zealand companies on the NZX.

First NZ Capital, Goldman Sachs, Deutsche Bank/Craigs and Forsyth Barr acted as Joint Lead Managers in the offer. 

The prospectus for the float forecast a cash dividend yield of around 5.9% to 6.8%.

(Updated with debut trading)

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If Z Energy is not a suitable buy and hold investment for the NZ Superannuation Fund what is it's investment status for retail investors, other than a possible stagging vehicle, prior to ending up in a another pension plan portfolio? Is this possibly a classic case of rob peter to pay paul?

The vendors are selling the max no. Of Shares they are able to. We note the seemingly relaxed vendor escrow requirements from the nzx.com.

A good success all round so far it seems. Must have been all that advertising on interest.co.nz. Hope they rewarded you well for it.