Government confirms it will buy up to $200 million of new Genesis Energy shares, purchase makes sure the Crown retains 51% of energy gentailer

The Government will buy up to $200 million of new Genesis Energy shares, following the company’s announcement it's undertaking a $400 million equity raise.

 In an NZX announcement the gentailer says a $400 million equity raise would “accelerate the development of its growth opportunities across renewable generation and dispatchable firming capacity”. Money raised would be used to reduce net debt, Genesis says in its investor presentation.

The Government’s share purchase means the Crown retains a 51% share of Genesis. Finance Minister Nicola Willis says the investment will support and advance the Government’s goals for secure and affordable energy.

“We confirmed last year that we would consider requests from all three Mixed Ownership Model energy companies for Crown investment in commercially sound generation capacity," Willis says.

“Genesis’ proposed investments will directly contribute to enhancing energy security, including through enabling Genesis to bring more flexible capacity to the market which can be used to address dry-year risk."

Energy Minister Simon Watts says this is only one part of a wider government work programme.

“This decision is part of a wider package of work the Government is undertaking to support energy security and drive down the cost of living for all New Zealanders," Watts says.

State Owned Enterprises Minister Simeon Brown says the Government's investment aims to strengthen the performance and long-term value of one of New Zealand’s state-owned assets.

“This is about delivering better outcomes for Kiwis and ensuring we have a stronger, more secure, and more reliable energy system.”

Genesis supplies electricity, natural gas and liquefied petroleum gas to around 496,000 customers. It reported $307 million in earnings before interest, taxes, depreciation and amortization for the six months ending December 2025.

With total electricity demand projected to rise by about 25% from 2025 to 2035, the company says it is; “well placed to capitalise on significant opportunities to build new renewable generation to address increasing demand”.

“Growth is forecast to be driven by: EV (electric vehicle) uptake, data centre growth, commercial and industrial electrification.”

The equity raise will be made up of a $100 million ‘placement’ and $300 million 1 for 7.9 pro rata renounceable ‘rights offer’.

When it comes to the ‘placement’ aspect, this will be done through a bookbuild, Genesis says, “in which eligible institutional investors and New Zealand resident clients of retail brokers will be invited to participate”.

“The ‘placement’ will comprise the issue of approximately 46.5 million new shares, representing approximately 4.2% of current issued capital, to raise gross proceeds of $100 million. The ‘placement’ price is $2.15 per new share, which is an 8% discount to the ex-dividend adjusted closing share price on the NZX of $2.34 on Friday, 20 February.

Meanwhile for the ‘rights offer’, eligible shareholders can apply for one new share for every 7.9 existing shares held. The price is $2.05 per new share.  The Offer, other than the Crown participation, is underwritten by Jarden Partners.