The Government said its Genesis Energy share offer will
proceed next month using a so called "front end" book build
process that will see the price revealed at the start of
offer, and which may involve less than 49 per cent of the
company being sold.
This time around, the bookbuild process will be open to both
institutions and the broader broking community to create more
competition for the shares.
The front end bookbuild offer follows criticism of the other
two "back end" book building processes for Mighty River Power
and Meridian which saw the price set at the end of the
initial public offer (IPO) process. This time, as little as
30 per cent of Genesis could be put up for sale.
The Genesis offer is expected to open in the second half of
March with the company expected to be listed on the market by
around mid-April, subject the market conditions, Finance
Minister Bill English said in a statement.
"As with the other share offers, New Zealanders will be at
the front of the queue for the Genesis share offer and we
remain committed to at least 85 per cent kiwi ownership," he
English has in the past talked about the need to hit a "sweet
spot" in the pricing of the offers to suit the needs of the
taxpayer, through the Government, and the investor. Assuming
49 per cent of Genesis is sold, the sale is expected to
return about $1 billion to the Government.
The shares will be priced at the start of the offer period,
rather than as occurred with the previous share offers.
Front end book builds were used successfully last year for
the Synlait, SLI Systems and Wynyard IPOs.
English said the revised process would provide more certainty
for Kiwi retail investors because they would know the price
from the outset.
For the fist time in the sales programme, New Zealand
sharebrokers will bid for shares at the same time as
institutions, which English said would create stronger
competition for shares during the book build.
The Government expects to sell between 30 per cent and 49 per
cent of the shares in Genesis. When the programme was first
mooted, the Government said it would offer up to 49 per cent
of power companies.
The Government is also expected to use a shareholder loyalty
scheme that will be more attractive than the one for 25
scheme used for Mighty River.