New Zealand announced yesterday it will sell 49 percent of a state-owned energy company and list the shares on the country’s stock exchange in about mid-May.
Mighty River Power is the first of three power companies the government plans to sell minority stakes in. It hopes to raise billions of dollars and return the country’s books to the black.
The government said it will sell 49 percent of the company through a share offer that will open in about the middle of next month. The company is valued at NZ$3.6 billion (US$3 billion), meaning the listing could raise about half that. It will also be listed on the Australian stock exchange, likely to attract financial institutions there to buy shares in the initial public offering.
Many New Zealanders oppose the plans, which a number of people equate with selling the family silver.
The government promised to favor so-called “mum and dad” investors by offering New Zealand retail investors a loyalty bonus, the details of which have yet to be announced. It also promised that small New Zealand investors applying for up to NZ$2,000 worth of shares would get their full allotment even if the initial public offering was oversubscribed.
“As promised, New Zealanders will be at the front of the queue for shares,” New Zealand Prime Minister John Key said at a media conference on Monday.
David Shearer, leader of the opposition Labour Party, said in an interview that New Zealanders are “overwhelmingly” against the sale and that his party would put a halt to the asset-selling program if it wins next year’s general election.
He said he could not promise it would buy back any shares already sold by then.
“We were shocked to hear that shares will be offered on the Australian exchange as well,” Shearer said. “The promise has always been that New Zealanders would be at the front of the queue, but this seems to reach out for corporate investors.”
The government last month won a Supreme Court ruling which allowed the sale to proceed.
Maori had argued they held traditional rights to the Waikato River water that is used by the power company to generate electricity. The Maori Council argued a listing of the company would prejudice its financial claims to those rights, but the court found that a partial sale would not impede the claims.
The government also plans to sell 49 percent stakes in Genesis Energy and Meridian. The planned sale of a minority stake in a fourth energy company, Solid Energy, appears unlikely after that company ran into financial difficulties. The government has also said it may reduce its 73 percent stake in national carrier Air New Zealand.