Infratil and the NZ Super Fund have confirmed they will look to float up to 60% of their jointly-owned (50-50) Z Energy, raising possibly as much as NZ$900 million.
The float will take place next month, with the Z shares to be listed both on the NZX in New Zealand and the ASX in Australia. The indicative range for the share price is between NZ$3.25 and NZ$3.75, which would raise between NZ$650 million and NZ$900 million for the Super Fund and Infratil.
If the top end of the price range was to be achieved, this would be a terrific pay day for the Super Fund and Infratil, given that the whole company cost just NZ$696.5 million three years ago when bought from global energy giant Shell.
Z's assets include a fuel distribution network, service stations, truck stops and a 17.1% stake in the Marsden Point oil refinery.
The float will be an interesting test of market conditions, coming as it does in between the Government's float of 49% of Mighty River Power earlier this year and the proposed float - possibly in about October of Meridian Energy.
A successful float of Z would be a fillip for the Meridian float, but if it didn't go well the reverse could be the case. Since listing MRP shares have struggled and as of today were still below their NZ$2.50 issue price, at NZ$2.39.
Infratil chief executive Marko Bogoievski said Z Energy had strong cash flows, a good dividend outlook and had identified a range of potential future growth areas, including new retail service stations, customer offers and enhancements to Z’s terminal infrastructure.
“This listing is an opportunity for investors to take a stake in a major infrastructure and retailing company that plays a significant role in keeping New Zealand’s economy moving,” said Mr Bogoievski.
Mr Bogoievski said “Z Energy has been a very good investment for Infratil and while an Initial Public Offering will see us reducing our holding we will still have a significant investment after the proposed IPO.”
Super Fund spokesperson Stewart Brooks said funds raised would be re-invested by the fund in other investment opportunities in New Zealand and internationally.
As outlined in the offer document, the remaining shares held by Infratil and the Fund will be locked in until after the release of Z’s results for the half year to 30 September 2014.