Treasury says it has appointed Deutsche Bank and Craigs Investment Partners, which is 49.9% owned by Deutsche Bank, as financial advisors for preparatory work it's doing ahead of potential state owned enterprise (SOE) selldowns.
As reported by interest.co.nz last week, Deutsche Bank has landed the highly sought after role, although Cameron Partners, thought to also be in the mix, has missed out.
John Crawford, Treasury's general manager, said Deutsche and Craigs were picked after a "rigorous assessment process from a strong line up of credible candidates.” Indeed, a proverbial who's who of the investment banking world threw their hats in the ring.
The National-led government has instructed Treasury to conduct preparatory work to enable partial sales of Mighty River Power, Meridian Energy, Genesis Energy, and Solid Energy and to reduce the Crown’s 74.69% shareholding in Air New Zealand, with the Crown retaining a majority stake in all the companies. The issue of partial SOE sales is shaping as a key election year issue, ahead of the November 26 general election, with National pledging to push ahead with the sales should it be re-elected and Labour strongly opposing the plan.
"Deutsche Bank and Craigs Investment Partners will provide advisory and project management services, starting immediately," Crawford said. "This contract period ends prior to the November general election."
Treasury will next be seeking another party, or parties, to do scoping studies on the proposed selldowns.
Any SOE selldowns, through sharemarket floats expected to give local investors a leg up over their international counterparts, would happen over a three to five year period starting in 2012. Treasury estimates implementation of this so-called 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.
Touted as a way of boosting "ma and pa" retail investors' investment opportunities away from property and collapsed finance companies, 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.
Should the selldowns ultimately go ahead, there will be further advisory/management mandates sought, including those of actually floating the companies on the sharemarket. Ultimately, asset sales of such scale are likely to lead to tens of millions of dollars in advisors' fees to investment bankers and the big legal and accounting firms.