Genesis Energy's initial public offering will start next
month. Photo by Genesis Energy.
The Government is taking extra steps to try to ensure the
Genesis Energy share offer is successful after disappointing
post-float performances by the two other energy companies,
Mighty River Power and Meridian Energy.
This time, the Government will front-end book-build the
initial public offering - meaning investors will know the
price before they take up the offer - in a similar way to the
successful IPOs last year of Synlait, SLI Systems and
Wynyard. The Government has also reduced its expectations for
demand, saying it expected to sell between 30% and 49% of
Genesis, compared with 49% of Mighty River Power and
Finance Minister Bill English said when the Government
announced the share offer programme nearly three years ago,
it said it would sell up to 49% of those companies, subject
to market conditions.
''Our initial advice is that a smaller Genesis offer could
increase price tension in the front-end book-build by
offering fewer shares to more bidders.
''But we will not know that until we further test demand in
the market, where investors now have a wider choice of
several energy companies. Our aim is to set a fair market
price that works for both taxpayers and investors.''
The Government would also offer loyalty bonus shares to
eligible New Zealand retail investors in Genesis, as it did
with Mighty River, he said. The quantity of bonus shares and
the loyalty term would be announced at the start of the share
State Owned Enterprises Minister Tony Ryall said the
book-build process allowed all major sharebroking firms to
take part alongside New Zealand and international
institutions. The company would retain at least 85% New
The Government would not offer Genesis shares to United
''This decision removes restrictions on the way the Crown,
the company and its advisers are able to provide information
to New Zealand retail investors and will help improve the
accessibility of this offer,'' he said.
Mr English reiterated the statement by Prime Minister John
Key this week that the Genesis share offer would be the last
SOE or mixed ownership company to be floated by the
''The Government won't be selling any more shares in SOEs or
mixed ownership companies, either this term or after the
election. We've achieved what we wanted to with the share
offers in energy companies and Air New Zealand,'' he said.
The Government was now moving to a business-as-usual approach
to SOEs. That did not preclude SOEs buying and selling
assets, which they did all the time, or entering into joint
ventures or other arrangements.
The remaining SOEs were small entities, natural monopolies or
companies in sectors unsuitable for future share offers, Mr
''What people don't realise is the value of the share sales
programme is just 2% of around $250 billion of total assets
owned by taxpayers. Our focus will remain on improving the
management of this significant stock of assets on behalf of
New Zealand taxpayers who rely on the Government to deliver
high-quality public services.''
An example was taxpayers owning $17 billion of state houses,
he said. About one-third of those houses were in the wrong
place or were the wrong size.
The State had not kept up with the impact of changing demand
in terms of the size or location of housing. Assistance for
vulnerable New Zealanders in need was not as effective as it
should be, Mr English said.
Labour, Green and New Zealand First MPs were critical of the
way the float was being handled.
The Government had originally said it would raise between $5
billion and $7 billion from asset sales. Solid Energy, which
was thought to be worth $3 billion, was withdrawn from sale
after nearly collapsing from too much debt.
A Labour-Green proposed single-buyer electricity authority
also spooked investors.
• Share offer to open next month.
• A loyalty bonus will be part of the incentives
• New Zealanders get first opportunity to buy.
• Between 30% and 49% of the company will be sold.