Demand for Mighty River Power shares this afternoon is expected to come from New Zealand institutions that were scaled back in their requests and allocations.
Milford Asset Management senior analyst William Curtayne said he believed institutional demand would be strong as they sought to meet their targets for shares.
Mighty River Power was likely to rate three or four in the NZX50 when it was included later this year.
It appeared the Government had allocated shares to ''good long-term funds'' that would want to increase their holdings and keep the shares as long-term investments.
''They seem to have avoided hedge funds, which tend to buy up and flick them on on the first day. It seems shares have gone to high-quality, long-term investors.''
The $2.50-a-share price was a ''reasonable level'' because the Government did not want investors to lose money, he said.
However, Mr Curtayne was disappointed with the retail, or household, take-up of shares. Those investors had been scared off by the proposal by Labour and the Greens to nationalise the electricity industry should they win the election next year.
Figures supplied to the Otago Daily Times showed that 1783 potential investors withdrew their $25 million of applications after the release of the policy.
The Government said 86.5% of the shares issued would be New Zealand-owned, with 26.9% held by New Zealand retail investors, 8.6% by New Zealand institutions and the Government retaining its 51% majority stake. Overseas institutions received 13.5% of the shares.
Some of the successful applicants were scaled back. If someone had asked for $30,000 of shares, they would receive today $26,500 of shares if they were pre-registered and $21,200 if they were not.
An application of $75,000 would receive shares worth $54,750 if they were pre-registered and $43,800 if they were not.
Labour and the Greens continued to claim yesterday
power prices would rise once Mighty River Power was in the hands of private investors.
The ODT asked both Labour leader David Shearer and Green co-leader Russel Norman for proof of the claim.
Mr Shearer's office replied saying it was ''natural'' that private investors, including overseas buyers, would want to get the best return for their investment and that put pressure on power companies to make bigger profits.
That, in turn, pushed up prices for consumers. Also, it was worth noting that analysis carried out by energy activist Molly Melhuish found that private electricity companies in NZ charged households 12% more, on average, than the SOE energy companies, Mr Shearer's office said.
Dr Norman was too busy to reply to the questions but a spokesman provided a spreadsheet that showed the same result as the research carried out by Ms Melhuish, with a 12% difference in pricing between private and SOE energy companies.
That was because private investors had a higher cost of capital and, therefore, needed larger profits for an investment to be viable.
