Air New Zealand's share price has improved the most since
the sell-down of the Government's share in the national
carrier. Photo supplied.
Craigs Investment Partners has given the Government a
seven out of 10 when it comes to getting value for the taxpayer
from the mixed ownership model. Business editor Dene Mackenzie
looks at some of the other returns.
The Government raised $4.67 billion in total from the sale of
minority stakes in the four companies it sold down during the
last 12 months.
The original target was to raise $5 billion to $7 billion,
although that included Solid Energy, so the revised target
became $4.6 billion to $5 billion.
Solid Energy needed to be bailed out by the Government and
the banks as it struggled to avoid bankruptcy. The Government
withdrew the company from the mixed ownership model
Craigs Investment Partners head of private wealth Mark Lister
said the Government just scraped into the bottom of the
range, ''quite commendable'' especially given the political
drama that had occurred throughout the process.
''Genesis was probably sold too cheaply but the taxpayer was
the big winner with Mighty River Power - and remember Genesis
represented just 15% of total proceeds while Mighty River
Power accounted for 36%. On balance, a fair and acceptable
A seven out of 10, he said.
The Government received an eight out of 10 for offering good
returns to investors.
Mr Lister said three out of four was not bad. The NZX50
delivered a 14.9% return over the past year, yet Meridian was
up 22% since October, Air New Zealand was up 28% since
November and Genesis was up 17% since April 17.
Mighty River Power had been a poor performer, returning 6.6%,
although that was mainly due to mispricing at the start.
Operationally, the company had done well.
''But with an average return from all four of 15%, [at April
17] it's difficult to argue that investors who have supported
the programme all the way through have done badly.
''Some will argue it was much easier to get big allocations
of the worst performer - Mighty River Power - while nobody
got much Genesis. But there was plenty of Meridian and Air
New Zealand to go around at the time and those have been the
two best performers of the bunch.''
The Government received only a four out of 10 in getting a
new generation of New Zealanders to embrace share investing,
Mr Lister said.
The programme was a great opportunity to give ''everyday
people'' a good experience in owning shares in solid,
predictable, reliable companies. It was hoped that would have
been a step in growing New Zealand's capital markets,
teaching people the sharemarket was not just a casino, and
making potential investors consider something other than
another rental property.
Mighty River Power should have looked like Genesis did, he
It should have had generous pricing and an even more generous
retail incentive and a solid after-market performance.
''That would have ensured more widespread retail
participation - especially from first-timers - and the
bragging during last summer would have ensured the next three
got even more solid support.''
The Government could have then afforded to get slightly less
generous as the programme went on, Mr Lister said.
Instead, many of first-time investors got burnt on Mighty
River Power and stayed away from the next three which all
turned out to be good investments. The more experienced
retail investors reaped the benefits of Meridian, Air NZ and
The 111,000 new share investors that emerged during the
course of the programme were welcomed but the number should
have been much higher, he said.