Meridian Energy's instalment receipts debuted at $1.08 after
tepid demand in the initial public offering saw the stock
sold at the bottom end of its indicative range and with a
smaller-than-expected pool of investors.
The shares were offered in instalment receipts to sweeten the
offer, with $1 upfront and the promise of full entitlement to
dividends, and the remaining 50 cents in May 2015.
The float will raise $1.88 billion after the two instalment
payment programme completes in 2015. They recently traded at
$1.07 with 41 million shares changing hands.
Meridian's market capitalisation rose to $1.36 billion on a
partly-paid basis, compared to $1.26 billion at the IPO
price. The government's 51 percent stake isn't counted toward
the total number of shares on issue until the second
instalment is paid, so until then only 1.26 billion of the
2.56 billion shares are recognised.
The government attracted some 62,000 New Zealanders to the
selldown of 49 percent of Meridian at $1.50 a share, the
bottom of the indicative range of $1.50 to $1.80.
Demand for the shares was eroded by the risk posed by the
Labour Greens policy to install a central buyer of power,
effectively capping prices that could be charged for
Uncertainty over the longevity of sales to the Tiwai Point
aluminium smelter also dented enthusiasm. Revised contracts
for the smelter's consumption were concluded in August for a
plant that uses around 14 percent of all electricity produced
in New Zealand and accounts for around half Meridian's annual
The sale of Meridian also follows the lacklustre performance
of MightyRiverPower shares, which sold in May at $2.50 a
share and last traded at $2.19.
The government has said it may still press ahead with the
sale of Genesis Energy in the first half of next year,
assuming market conditions suggest there is appetite for
another large, New Zealand electricity company float.
With Contact, Meridian, MRP, TrustPower and network company
Vector, half the shares in the top 10 NZX shares are in the
electricity sector.While shares were issued at $1.50
investors paid only $1 up front for the first instalment
receipt. That is what has begun trading today.
The second instalment isn't due to be paid until May 2015.
- BusinessDesk/By Tamsyn Parker of the NZ