Meridian Energy is to be listed on the sharemarket in early
November with investors asked to pay 60 per cent of the price
upfront with the remaining 40 per cent due in 18 months time.
Prime Minister John Key has announced details of the float
this morning in what is expected to be New Zealand's largest
ever share market listing.
Meridian is the country's biggest state-owned power company
and was last valued at $6.58 billion by Treasury.
The Government wants to sell up to 49 per cent of Meridian in
a move that could raise up to $3 billion for its coffers.
As part of an incentive scheme investors will only have pay
part of the money upfront but will receive the full dividend
payout for the shares.
The remaining money won't be due until May 2015 - potentially
six months after the next general election. If a person sells
their shares during the 18 month instalment period, the buyer
becomes responsible for the final payment.
Meridian will make three dividend payments during this 18
month period - at 6 months, 12 months and 18 months.
Retail investors will also have more certainty around the
price they pay as the share price for mum and dad investors
will be capped.
Unlike the Mighty River Power float there will be no official
pre-registration period or share bonus scheme.
There will be a minimum application of $1000 for the first
payment in November.
Analysts have said the Meridian float would have to be more
attractive than the Mighty River Power which was listed on
the stock exchange in May.
Its shares were sold at $2.50 a piece but have languished
under the listing price in recent months.
This morning they were trading at $2.22.
State Owned Enterprises Minister Tony Ryall said a minimum
purchase of $1000 worth of shares was being maintained to
encourage widespread take-up of the shares.
He said New Zealanders were no sufficiently familiar with the
process to make the pre-registration phase unnecessary
although potential investors could still register their
Retail syndicate made up of ANZ ASB and Forsyth Barr would
market the offer to New Zealanders.
Mr Ryall said another key difference with the Meridian float
was the price cap for retail investors compared to the fairly
standard "bookbuild" used in the Mighty River Power float.
The price cap, which would be set when the prospectus was
issued would provide certainty to retail investors.
"We understand many people like to know the maximum price
they'll pay before they buy shares."
Mr Key said the instalment receipt plan was effectively an
interest-free loan to retail investors.
It would mean they received a "pretty beefy dividend" on
their initial 40 per cent payment for shares.
"It helps the digestion of a larger float", Mr Key said.
He said while it would have been technically feasible to also
float Genesis Energy this year but that was now likely to
happen early next year.
Mr English said the foregone interest on the 60 per cent
second instalment was a cost to the Government, but "in the
context of the whole float it's a pretty small cost".
Mr English couldn't say which of the Mighty River Power
loyalty bonus share scheme or the Meridian instalment
receipts plan were of more benefit to investors, "because we
don't know the price".