Treasury is seeking yet another adviser to help with the government's planned selldowns of state owned assets (SOE), this time moving to recruit a Probity Adviser to help police potential conflict of interest issues.
In a request for proposal Treasury says applications for the role must be in by noon on Monday, May 28 and it hopes to have a contract in place with the successful applicant by June 18.
Treasury already has a smorgasbord of advisers in place for the selldowns of government assets. Investment banks First NZ Capital and Credit Suisse Australia, Macquarie Capital and Goldman Sachs have been appointed as joint lead managers for the first initial public offering, that of electricity generator and retailer Mighty River Power.
Those firms are part of a panel of firms Treasury has established that can potentially act as joint lead managers of the various sharemarket floats, with this panel also including UBS, a partnership between Forsyth Barr and Merrill Lynch, plus Deutsche Bank and its 49% owned Craigs Investment Partners.
Last year Treasury appointed Deutsche Bank and Craigs Investment Partners as Crown Adviser for the SOE sales process, Australian based Lazard as Independent Adviser, and commissioned UBS, Macquarie, Goldman Sachs and First NZ Capital to do scoping studies on Solid Energy, Mighty River Power, Genesis Energy and Meridian Energy, respectively.
State-Owned Enterprises Minister Tony Ryall said in December the selldowns will see the government pay about NZ$100 million in fees to investment banks. That would work out to be around 1.8% of the sale price, which was in line with costs relating to the Contact Energy privatisation in 1999.
Lawyers, a PR firm, advertisers & market research consultants too
But investment banks aren't the only ones in on the action. Treasury has appointed Bell Gully as legal advisor for the Mighty River Power float, with a panel of law firms picked as preferred suppliers of their services for the floats. Aside from Bell Gully, the panel also includes Chapman Tripp, Russell McVeagh and Simpson Grierson.
And also for the Mighty River Power float Treasury has hired public relations firm Senate Communications, advertising firm Clemenger Group, Chris Major as marketing and communications director, and Computershare Investor Services to provide online services and infrastructure (including websites), transaction services and infrastructure including processing of applications for shares, mail house services, call centre services. In addition Treasury has advertised for a market research consultant.
The National Party, re-elected to government on November 26 last year for a further three years, contested the election on the policy of selling up to 49% stakes in Mighty River Power, Genesis Energy, Meridian Energy and Solid Energy, as well as selling down the government's 73% stake in Air New Zealand to no less than 51%.
The government is touting this 'mixed ownership model' as a way of boosting "ma and pa" retail investors' investment opportunities away from property and the collapsed finance company sector.
Treasury estimates the share sales will raise between NZ$5 billion and NZ$7 billion, which has been earmarked by the government for "social infrastructure" spending, such as school upgrades and irrigation, over at least the next five budgets. The money will be noted in Treasury's accounts as the "Future Investment Fund."
To date, the government has already promised to spend NZ$1.48 billion of the SOE share sale proceeds: NZ$1 billion for school upgrades, NZ$400 million for irrigation investment, and NZ$80 million to help fund a technology institute.
For the role of probity adviser Treasury says applicants must have the ability to provide the following services:
• review and update existing probity and conflict management protocols and resources as required;
• prepare and review new resources to mitigate and manage potential conflicts of interest;
• the review of Requests for Proposals (RFPs) for the appointment of consultants and service providers to assist The Treasury to provide its advice
• ensuring that the RFPs are conducted fairly and in accordance with recognised good practice, Treasury’s policies, all applicable statutory requirements and Government guidelines
• providing advice on the identification and management of any real or perceived conflicts of interest in relation to tender processes and the services performed by existing contracted suppliers;
• minimising the risk of any successful complaint or challenge to the procurement of services by The Treasury or any sales processes; and
• providing any other probity advice that the Respondent considers necessary or desirable and which the Treasury requests the Respondent to provide.
The Respondent must also provide an outline of its approach to providing the Probity Services and demonstrate an understanding of the commercial issues that are likely to arise in providing the Probity Services.
Meanwhile, it says the Crown has 10 objectives for its mixed ownership model programme
1 Fiscal (static). Optimise the value for the Crown and freeing up capital
2 Fiscal (dynamic). Allow the companies to obtain growth capital without depending entirely on the government
3 Capital market development. Broaden the pool of investments available to New Zealand savers, and increase the depth of New Zealand capital markets
4 New Zealand participation. Place New Zealand investors at the front of the queue and achieve widespread and substantial New Zealand share ownership
5 Commercial disciplines. Ensure these large and important companies reap the benefits of sharper commercial disciplines, more transparency, and greater external oversight to allow them to make the strongest possible contribution to New Zealand’s economic growth
6 Majority Crown ownership. Ensure the government has a controlling stake
7 Good investment opportunities. Ensure the companies involved present good opportunities for investors
8 Protect consumer. Ensure that industry specific regulations adequately protect New Zealand consumers
9 Low execution risk. Successful implementation is achieved (such as good demand for shares, and the shares perform well after listing)
10 Timing .The programme will be well advanced by 2014, to allow capital to be released over the next few years to finance other capital priorities
The government has also set up a website to provide information on the asset selldowns.