Govt gets tick for state asset listing

The National-led Government yesterday received approval for what many already believe will happen after the next election - the partial privatisation of state assets.

The final report of Capital Markets Development Taskforce was presented to Commerce Minister Simon Power.

Also among the recommendations were the establishment of a new watchdog for capital markets, partial state funding of research on small companies and tax changes.

The task force, which has been working for 18 months, does not regard these ideas as radical, arguing that Air New Zealand is already majority state owned and listed on the sharemarket, and the model works well.

Forsyth Barr broker Peter Young said the partial listing of state assets would be a major boost for the New Zealand sharemarket.

"It would increase liquidity and generally be seen as a positive thing for the stockmarket."

Possible listings could come from the electricity sector, New Zealand Post and Solid Energy.

The utility companies were the clear candidates as they were blue chip companies, and "mum and dad investors" were keen to buy into the companies.

That generally made for a good IPO (initial public offering), he said.

"However, it's a political issue at the moment so we will have to wait and see what comes of the task-force report," Mr Young said.

During last year's election campaign, National consistently said no state assets would be sold or privatised in its first term of government.

That was taken to mean that if National retained the Treasury benches for a second term, some state assets would be up for sale.

Labour Party commerce spokeswoman Lianne Dalziel, a driving force in setting up the task force when she was a minister, said Labour would not support even the partial listing of state assets.

"The fact that Labour would say no to listing state assets should not detract from its support for the general thrust of the task-force report."

She particularly favoured the recommendations around changes to capital markets to help firms raise funds and New Zealand to capture more of the gains for business growth.

The task force did not suggest a level of partial privatisation but it had commissioned work on the issue and found it depended on the size of the company, task force chairman Rob Cameron said.

"For some, 10% of existing equity would be enough, for others you need more.

"Air NZ has about 20% of their stock listed and it works."

The share of the economy held by state-owned enterprises in New Zealand was not hugely out of line with other countries but it was unusual that the assets were 100% state owned.

In France, many state-owned assets were partially owned, he said.

The task force was addressing the issues of lack of depth in the local capital markets and a lack of trust in them, particularly among retail investors.

 

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