Mighty River Float Raises $NZ 1.7 Billion

Some 110,000 New Zealanders bought shares in the Mighty River Power float, and around 68,000 of these may be first-time investors. However, the NZ Green Party claims that half the shares sold went to just over 13,000 people, with 10% going to just 400 individuals, trusts and organisations. The Government raised $1.7 billion by selling 686 million shares, or 49 per cent of Mighty River to local and overseas investors. New Zealand institutions were allocated 8.6 per cent of the shares on offer and overseas funds got 13.5 per cent. But Green co-leader Dr. Russel Norman told the New Zealand Herald that half of the Mighty River retail shares went to just 0.3 per cent of the population. Dr Norman said while 113,000 investors bought 26.9 per cent of Mighty River, half of those went to fewer than 13,000 investors who bought an average of nearly $35,000 worth of shares each. ‘101,000 retail investors bought only 13.4 per cent of the company – less than the amount taken by overseas institutions,’ Norman said. Total New Zealand ownership of Mighty River stood at 86.5 per cent per cent after the allocation process, with overseas institutions ending up with the rest. Mighty River’s share loyalty scheme means domestic investors will receive one loyalty bonus share for every 25 shares held for two years from the offer, up to a maximum of 200 bonus shares. Bill English, the NZ Minister of Finance, said that the partial sale of Mighty River, ‘demonstrated that the Government’s share offer programme works. Mighty River Power now has the benefits of greater access to capital, better monitoring and oversight, and the market discipline that comes from being a listed company’, English said. In its May 2013 Budget, the Government confirmed that Meridian Energy would be the next for partial privatisation – a sale is forecast to raise up to $3.25 billion. ‘Meridian will benefit from that same process, and New Zealanders will once again have the opportunity to invest in the initial public offering of a large New Zealand company’, Bill English said. Mr. English spelt out how the cash from the partial asset sales will be spent this year, including $426 million on Christchurch hospitals, and a further $94 million on KiwiRail. Irrigation projects will receive $80 million, and $50 million will be spent on the broadband rollout to schools. The Government has committed a further $700 million from the sales to “new contingencies” such as new schools, a new justice and emergency services precinct for Christchurch and financial support for the city’s tertiary institutions as they recover from the quakes.

Tags: asset sales  Bill English  Meridian Energy  Mighty River Power  Minister of Finance  New Zealand Herald  Russel Norman