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Distribution, ability to tap markets key to lead manager role for SOE sales: Treasury

Thursday 15th December 2011

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Investment banks vying for $100 million in fees from the sell-down of state assets will need to have access to strong trans-Tasman distribution networks or prove they can raise funds if they want to be included in the Treasury’s panel of lead managers.  

The government department has put out a request for proposal for firms that want to act as joint lead manager or lead manager for the sell-down in the Crown’s holding of some of its energy companies. As a minimum, the Treasury wants firms that can tap large numbers of retail and institutional investors, or have a track record of sizeable capital raisings.

“Respondents should note that it is unlikely that they will be appointed to the JLM (joint lead manager) Panel unless they have, or have access to, a substantial distribution network across retail and institutions, both in New Zealand, Australia and in other international markets or have acted as a lead manager or joint lead manager of a capital raising of at least $200 million in value,” the document said.

The Treasury wants to set up a panel from which it can appoint the lead managers to the various sales, and is using the tender to pick the winner for the sale of Mighty River Power, which will be first on the block sometime in the third quarter of next year.

Firms selected for lead manager roles will prepare the companies for sale, including due diligence, assisting to write offer documents, and advising the Crown in relation to the sale. They will also market and arrange the offer, though the Treasury will hold the right to act as the bookrunner.

Crown adviser Deutsche Bank will give advice to the Crown on the implementation of the extension of the programme, while independent financial adviser Lazards will provide advice on each transaction.

State-Owned Enterprises Minister Tony Ryall today said he would expect the fees from the sale to be about $100 million, which would be in the same range as the 1.8 percent of Contact Energy’s sale price 12 years ago.

In separate tender documents, the Treasury is also seeking a PR tsar to plan and put in place “an overall public relations approach for the programme, and for each of the IPOs or transactions that make up the programme,” a marketing team to run the advertising campaign for the offers, and a back office team to man a call-centre, organise the mail-outs and set up a digital strategy for the sales.


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