Weldon says Government asset move could give NZX mass

Thursday 27th January 2011 1 Comment

The state-owned energy companies the Government is looking to list on NZX will give the sharemarket a new "blue chip" sector and provide an alternative to bank deposits and finance companies for savers, says NZX chief executive Mark Weldon.

In the speech to an Auckland business audience, Prime Minister John Key said Mighty River Power, Meridian, Genesis and coal company Solid Energy were all being looked at for partial sale - up to 49%, and advice was also being sought on reducing Crown shares in Air New Zealand from 75% to 51%.

"We will be going into the 2011 campaign campaigning to have mixed ownership to allow New Zealand mums and dads to buy up to 49% potentially of those four companies and potentially reducing the stake we have in Air NZ."

Weldon welcomed the move, which will bring the companies to the sharemarket as the ownership structure is Air NZ's model where the company is listed.

"I'm pleased the prime minister has come out so early, so strongly and so clearly and it is practical," Weldon said.

He said the Air NZ ownership model worked and hopefully the debate following Key's speech would not be ideological.

If the Government gets a mandate to proceed at this year's election the partial privatisations could happen pretty quickly in 2012, Weldon said.

He said the people who invested $14 billion in finance companies were looking for safe NZ dollar investments.

"These are established blue chip companies with strong market positions, transparent accounts, strong governance, majority government ownership and very good cashflow," Weldon said.

The local sharemarket lacked a banking sector, which made up 20 to 40 percent of many other markets, and these energy companies could give it "mass in the middle".

Contact Energy had earlier been sold to about 100,000 New Zealand investors and there had been low turnover in its share register.

"This is an opportunity to invest in, and own, a little of some of New Zealand's best businesses. That is a pretty unique thing," Weldon said.

Weldon is also hoping that the Government will remove taxation blockages to make investing in shares more attractive.

If new investors were attracted to the sharemarket and had a good experience there would be a spin off for smaller companies looking to list on the market.

"The criteria of New Zealanders being at the front of the queue is really important," Weldon said.

It was also important that investors were able to participate in this process easily and at very low cost, he said.

NZPA

Comments from our readers

On 27 January 2011 at 11:01 am Wendy said:

An alternative for Mum/Dad investors is great and the first sign that the government really wants to encourage savings,tax structure doesn't reflect that.The ipo must be aimed at all NZers to invest in not the instution bookbuilds.The contact model is good but control was allowed to slip away.