Treasury is seeking an array of advisors to help with the selldown of state owned enterprises, promised by the National Party should it continue to lead the Government after November's election, which is likely to be sweet music to the ears of the country's investment bankers.
Treasury's Crown Ownership Monitoring Unit today said it was seeking a commercial advisor to help with preliminary work ahead of the November 26 election, individuals to offer advice on specific aspects of the preliminary work, and firms to do scoping studies on each of the four state owned energy companies - Mighty River Power, Genesis, Meridian and Solid Energy - earmarked by National for selldowns.
National made its push for the so-called mixed ownership model for state owned power companies official in last week's Budget with the Government prepared to reduce its stakes in the four companies to as low as 51%. The Government is also looking to selldown its 76% stake in national carrier Air New Zealand.
The selldowns, through sharemarket floats giving local investors a leg up over their international counterparts, would happen over a three to five year period starting in 2012. Treasury estimated implementation of the mixed ownership model would free up between NZ$5 billion and NZ$7 billion of capital, to be put towards other areas of government spending. Asset sales of that magnitude are likely to lead to tens of millions of dollars paid out in advisors' fees to investment bankers and the big legal and accounting firms.
Touted as a way of boosting "ma and pa" retail investors' investment opportunities away from property and the collapsed finance company sector, the SOE floats are also seen as a way of kicking some life into a moribund domestic sharemarket whilst the Government still retains control of the companies listed. Analysts' at Goldman Sachs have suggested the Government selling minority stakes in SOEs could help halve the gap between New Zealand and Australia's Gross Domestic Product (GDP) per capita.
Read Treasury's statement below:
Following announcements in the 2011 Budget that the Government intends to further pursue a mixed ownership model and take that policy to the election in November 2011, the Government has instructed Treasury to undertake preparatory work on extending the mixed ownership model to Genesis, Meridian, Mighty River Power, and Solid Energy and to reduce the Crown’s majority shareholding in Air New Zealand.
The Treasury’s Crown Ownership Monitoring Unit (COMU) has established a separate team, the Commercial Transactions Group, to undertake this preliminary work.
The Commercial Transactions Group will focus on what is required to extend the mixed ownership model. It will operate separately from COMU’s normal commercial activities with other Crown owned companies. The Commercial Transactions Group will issue three separate requests for proposals (RFPs), using the Government Electronic Tender Service (GETS).
The first RFP is for a commercial advisor(s) to assist the Treasury in its preliminary work before to the general election, and is to be issued today.
The second RFP will be for individuals to provide Treasury with independent advice about selected aspects of the preliminary work, and is expected to be issued in the first half of June.
A further RFP will be issued in the second half of June, seeking firms to undertake scoping studies of each of the four state-owned energy companies.
A description of services and requirements for each of these RFPs, and for any other major services required by Treasury for this preparatory work, will be released on the GETS website: www.gets.govt.nz .
And here's Treasury's advice to the Government.