Prime Minister John Key has told a post-cabinet news conference the government could choose to stretch out the planned sale of 49% of Meridian Energy in two blocks to avoid giving the market indigestion.
His comments came as Mighty River Power shares slumped 4.5% to a record low of NZ$2.36 and well below the initial public offering price from last month. Concern is growing that the float of Meridian, which is around twice as big as for Mighty River, will struggle to be completed in the second half of this year as previously indicated given falling markets and the tepid demand for the float.
"It's a bigger float so the government is expecting to get in the order of NZ$3 billion for its share," Key said.
"We'll always reserve the right to do that float in chunks if we wanted to," he said.
"We wouldn't have to float 49% in one day. We might choose to do that if that's what the demand was like, but it could always do that in two slices."
Key said retail investors would always have to take up about a third of the shares on offer to make the mathematics of any offer work.
"If there are digestion issues, in theory that's a possibility," he said, confirming that a staged float was an option the government was actively considering.
Key pointed out that Meridian would be the largest stock on the exchange once floated and the Australian government had sold Telstra in stages, simply because of the size of the offer.
"The government will reserve the right to sell it in blocks. We could do that in two blocks," Key said.
(Updated with more quotes/details)