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English says MRP stock debuted in expected range, will name next SOE for sale in budget

Friday 10th May 2013

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Finance Minister Bill English says MightyRiverPower's shares rose as expected on their NZX debut while confirming that the next power company to be put on the block will be named in the budget next week.

"It's trading to the range that we would have expected," English said at the NZX headquarters in Wellington, where he watched the shares trade for the first time. He will make an announcement on the next float in the budget on May 16, he said.

MightyRiverPower shares debuted at $2.73, up 9.2 percent from their initial public offering price of $2.50. It traded recently at $2.70, giving the electricity generator and retailer a market value of about $3.8 billion. That means about $300 million has been added from the IPO. Some 24 million shares have changed hands so far today.

The debut catapults the company into fifth place among the top 10 domestic stocks on the market by value. The government raised $1.7 billion selling 686 million shares, or 49 percent of the company, at $2.50 to local and overseas investors.

The 9.2 percent initial gain compares with a 22 percent jump on debut for the Fonterra Shareholders' Fund on Nov. 30. The Fonterra units ended their first day up26 percent.

MightyRiverPower is the first of four SOEs plus Air New Zealand that are slated for selldown under a government policy to raise as much as $7 billion to repay debt and seed its Future Investment Fund, which is to help fund investment in school, hospitals and transport infrastructure such as KiwiRail.

Either Genesis Power or Meridian Energy is most likely to be next out of the blocks. Air New Zealand could follow, though coal miner Solid Energy is being restructured to return it to profitability before it will be considered.

The government is aiming to complete the second sale this year. "We're keen to get on with the next one," English said.

New Zealand institutions were allocated 8.6 percent of the shares on offer and overseas funds got 13.5 percent, with both scaled back considerably. A total of 113.857 individual New Zealand investors bought shares, accounting for 26.9 percent. The government retains 51 percent.

Based on forecast dividends, the offer price implies a gross dividend yield of 4.6 percent in the 2013 financial year, rising to 5.2 percent the following year.

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