Australia's Lazard to be Treasury's independent advisor helping oversee its Crown advisor on National's SOE selldown plans

Treasury has added Lazard, an Australian firm which has former Prime Minister Paul Keating as chairman of its international corporate advisory arm, to its list of advisors on the National Government's proposed state owned enterprise (SOE) partial privatisations.

Treasury has confirmed the appointment in a filing on the Government Electronic Tenders Service website. Earlier, The Australian Financial Review described the appointment as an important win for the grandfather of privatisation, Lazard's managing director and head of corporate advisory John Wylie, a key player in the sale of Victoria's electricity assets in the 1990s.

Lazard describes itself as a financial services house that's able to provide global perspective and quality transaction execution skills, plus local market knowledge and experience. It focuses on advising on mergers and acquisitions and equity capital markets transactions plus private equity. It has offices in Sydney, Melbourne and Perth.

Treasury says the appointment runs until December 31 next year but may be extended for one year. No disclosure was made of how much Lazard will be paid.

The firm's role with Treasury will task Lazard with providing counsel in areas including the design of and participation in the pre-qualification process for the joint lead managers of the proposed SOE floats and appointment of sales syndicates. Lazard will also provide "independent quality assurance" of the sales programme advice prepared by Crown Advisor Deutsche Bank and its 49% owned Craigs Investment Partners, plus independent advisory services during the consultation and execution phase for each transaction.

Treasury has also used four further firms to do scoping studies on the companies National proposes to sell stakes in. Interest.co.nz understands this has seen UBS working on Solid Energy, Macquarie on Mighty River Power, Goldman Sachs on Genesis Energy and First NZ Capital on Meridian Energy. See related earlier story here.

The government instructed Treasury in January to conduct preparatory work to enable partial sales of Mighty River, Meridian, Genesis, 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 a key election issue,  with National pledging to push ahead with the sales should it be re-elected and the Labour Party strongly opposing National's plan.

Any SOE sell-downs, 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 raise between NZ$5 billion and NZ$7 billion. Prime Minister John Key announced on the weekend that this money would be held in a specific fund for investment in infrastructure. Key also said some of the money could be used to help fund Kiwibank's expansion into business lending.

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.

Aside from the expected National election victory, the timing and composition of the sell-down programme will depend on market conditions and the outcome of the scoping studies.

The laying of the groundwork for the potential sell-downs comes with the November 26 general election closing in fast. Further advisory roles are still to come with the actual sales syndicates for each float. Total fees paid to the advisers are likely to be worth tens of millions of dollars based on the predicted NZ$5 billion to NZ$7 billion the sell-downs will raise.

(Updated with Treasury confirmation).