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

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).

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20 Comments

Don't the people that make these deals get paid millions.  These types of sales are great for the ones making the deal.  Not suprised to see the squid involved.  Lets see what thier fees are please.  Selling our assets and paying the salesmen millions for doing it is criminal.  

How much has the scoping cost so far?  The squid isn't cheap.

"Governments dont rule the world, Goldman Sachs rules the world" - Alessio Rastani

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Whats the sales commission on 5-7 billion?  50-70 million?  I can see why it's in our best interests to push ahead with this sale.  How can the deal cost so much to do?

Hurry up and crash the system so we can see whos "effort" has real value!

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May be I am just plain dumb, but the costs of everything to do with financials in a country  with a population smaller than lots of big  cities the world over is beyond me:

We have a Finance Ministry 

We have a Treasury  

We have a Reserve Bank  

We have a Revenue Minister (Does he look after the Revenue? I thought this does the IRD)

We have a New Zealand Debt Management Office  (Watching debt?)

And Commissions  and Investigators for anything and everything.

All of the above must have quite a few advisers, specialists, highly paid officials, overlords and underlings.

What are thy doing all day?

 

 

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What are thy doing all day? 

80% of the day is spent in meetings or in transit to meetings or reading the papers for the next meeting and the other 20% is spent entering and/or confirming attendance at future meetings via your electronic diary.

Trust me, I've been there.

 

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Oh thanks Kate, I finally got an answer........

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All these people make sure that PM Key’s megalomaniacal economic agenda is put into reality, the reason why we have to sell our assets and a few years later - as a nation thriving gloriously into insolvency.

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Gareth, I would be less irritated by this sort of reporting if you stuck with hard facts and stopped spinning government BS.

Treasury estimates implementation of this so-called mixed ownership model would free up between NZ$5 billion and NZ$7 billion of capital.  Can you please explain what you understand by 'freeing up capital'?

Prime Minister John Key announced on the weekend that this money would be held in a specific fund for and used for investment in infrastructure. This is party political BS and redundant to the story.

Key also said some of the money could be used to help fund Kiwibank's expansion into business lending.  'Could be'? This is also party political BS and redundant to the story.

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Always enjoy your comment Colin R but Idid not read any  focused spin by Gareth on it...more of a case of making an announcement ....then adding some superfluous attachment to that statement to complete the article.....so not one of his better works for sure , a bit of soggy doughnut to go with the coffee.

I did note the" Nationals expected win"  line though....the fat lady may have a little something to say about that yet..! 

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Thanks Christov. I didn't mean to suggest Gareth was generating spin - more as you suggest 'adding some superfluous attachment' that just happened to be repeating existing spin.

I think it may have been you who recently posted a quote from 'The Slog' that covers 'not thinking' and "piffle in the media":

Yes indeed, we are unwell. We drink too much, eat too much, shop too much, take offence too much, get involved in violence too easily, and, well, don’t think about anything much any more. We read piffle in the media, and fail to analyse, criticise, or even care. We do things and accept policies without so much as a moment’s thought being given to the ramifications and dangers. We ridicule those who point out the Emperor’s lack of clothes, and resent those whose far-sightedness has enabled them to escape the consequences of being brain-idle. We award ourselves the suffix ‘sapiens’, but blithely enjoy the sowing while denying the likelihood of reaping.

http://hat4uk.wordpress.com/2011/10/30/at-the-end-of-the-day-91/

I hope my comment encourages Gareth to think before he adds 'superfluous attachments' (piffle if you like) to his articles.

We are the audience, I like articles that are concise, to the point and don't waste my time. The site scores the same number of hits from me clicking a concise article as any other.

 

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Yes Hi Colin R...I won't take the creds for that ..Andrew J put it up as a link and I just took the extract hoping people would use the link he provided. Ta again A.J.

. Cheers Colin to your ten this week  great post said it all for me....that said when Gareth gets a sniff of something  he's got a journo's nose ....I do hope the story on Treasury bungling has not ended where he left it.....as that was a time bomb waiting for a detonator, but I only got as far as smelling the fuse burning. 

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When will NO-ZEAL-AND......wake up....................?

Why SoreL when this beautiful dream we are living ends with a bump in the night....or the falling off something ...or the suffocating.....or the deep sense of loss not knowing quite what......or the alarm goes off and says (mines a talking clock) morning dickhead are you ready to do it all again...?

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the only way governments can raise more money is to.

1 incresa taxes

2 borrow

3 sell assets.

what is your preference.

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Exactly. Reduce the Govt spending to what's absolutely necessary (no need for nonsensical wasteful “programs”, bloated public servant and consultant numbers), then reduce taxes accordingly and leave people with (a) more money in their pockets (to spend or save) and (b) the idea of personal responsibility over and control of one’s living standards.

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4. Zero Govt, decentralised and diversified.  

All they are doing is what people did for themselves for thousands of years, takeing care of the sick, the elderly, these were community responsibilities before nanny state kicked in.

Good people are not attracted to politics, if they are they either quit, or become corrupted.  Power corrupts, absolute power corrupts absolutly.  Sociopaths, and/or in it for the perks, taking what they can get for themselves.  Why else would they be feeding at the public trough?

They have near absolute power, who can argue with them?  They change policies regardless of public opinion, have no accountability to the voters.  Every election year they come out with the lies and outright BS.

Where are the real benefits for the population that come from government?  More debt (intergenerational financial tyranny), taxing on one hand while giving back with the other.  I see no benefit for the population, from having such a bloated government.

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It seems the U-turn from paying down debt with the proceeds from state asset sales, to investing in infrastructure projects sets the stage for a massive taxpayer guaranteed ponzi scheme. 

Ear-marking the sales proceeds to particular projects by segregating sums to be invested with the RBNZ is a means of credit wrapping costly off- balance sheet government guaranteed borrowing by the private PPPentities, to be appointed post election.

This way the privileged private sector pillagers (National party supporters?) get to double dip from the proceeds of our infrastructure listings with the added benefit of charging fees on leverage of say ten times  - who knows?  We will never be told and there are no legal requirements to do so under the statutes for off-balance sheet PPP financing.  

Furthermore, those sums invested with the RBNZ find their way into the banking system at the ridiculously low cost of  ~2.70% pa. The banks then on-lend to mortgage borrowers @ 5.00 -6.00%. 

What can go wrong?

 

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That's exactly what I suspect as well.  And on JK's announcement re "the fund" - English looked decidedly miserable in the background - I get the feeling he's not quite so committed to the Wash consensus' version of neoliberalism as is his boss.  I wouldn't be surprised if he suddenly resigns after the election given he's now figured out that he's part of the 99%.

 

 

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I think Billy Bob's pinning for the fiords Kate...the call of the wild...Open air sheep for the citified kind not such a big adjustment really and you don't gotta lie to the ones off to the meatworks promising them a New World in the Morning...Nosireeee Bob back to some clean living.

He may just do a Judas E before departing ....now would'nt that be a Hoot. 

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Hope they negotiated hard on fees...

No IPO's, few takeovers and little capital raisings going on at the moment. Alot of investment bankers are out of work or have little to do.

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Billenglish was the one that went overseas the other day and heard all the gloomy stuff from the Helicoptor man  et al. Notice his understatements eg the deficit is a  BIT bigger than expected ,SCF is a BIT more expensive than forecast,tax revenue is tracking a BIT less etc

As previously blogged , JK has gotta tell the nation how it it after the election incl the distinct possibility of Oz taking us down with them

 

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What a small world it is " Lazard -Paul Keating - Chairman Corporate Advisory International..." maybe Iain Parker has a point after all!

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