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Hot demand for Genesis Energy float

The government will progressively scale down applications for large shareholdings in Genesis Energy ahead of tomorrow's listing after the final partial privatisation in the current programme attracted 68,000 investors.

The scaling policy will cap general applications at $5,000, or 3,226 shares, and the government cut the broker allocations by 20 percent to meet the demand, Finance Minister Bill English and State Owned Enterprise Minister Tony Ryall said in a statement. Investors seeking up to 1,613 shares will get the full amount and those wanting between 1,613 shares and 3,226 shares will get the first 1,613 and 28.75 percent of the rest they asked for.

Investors wanting between 3,226 shares and 26,226 shares will receive the first 2,076 then 5 percent of that they asked for beyond 3,226 shares, and those wanting more than 26,226 shares will be capped at 3,226 shares.

The initial public offer attracted more interest than Meridian Energy, which drew 62,000 shareholders, though was less than the 113,000 people who bought into MightyRiverPower, the first IPO of the programme. New Zealand retail investors will end up with 26.7 percent of the company, local institutions with 10 percent, foreign institutions with 12 percent and participating iwi with 0.3 percent. The Crown will hold the balance of 51 percent.

Genesis will list tomorrow after a sale that raised $733 million for the government, taking the total proceeds from the mixed ownership model programme to $4.7 billion. The offer price was $1.55 per share.

Four of five independent research reports valued the shares above the offer price, which is seen as providing a strong dividend yield to investors.

(BusinessDesk)

What do you think? At what price will Genesis Energy list? Click here to vote in our subscriber-only business pulse poll.

Note:

[i]   Excluding any shares withheld for allotment of Loyalty Bonus Shares (where applicable)

[ii]  Includes shares withheld for allotment of Loyalty Bonus Shares or allocated to Participating Iwi (where applicable)

[iii]  Air New Zealand share offer was for 22% of shares in the company

Comments and questions
22

I think they will stay around $1.55. the scaling has been so severe that many investors will just dump them rather than sit on a small number that make it not worth the paper work.

Agree - assuming the price says more or less around $1.55 - there will be a mass dumping in 12 months time once many small investors have made a couple of hundred bucks from the loyalty bonus.

Good - it will sort out the wheat from the chaff.

Remember AIA? Those who took the opportunity to buy more in the first week of listing have made over 500% on their funds.

Yeah but it took 15 years, I'm sure many of the investors who took up the offer still don't hold that same stock.

I reckon you will be 100% wrong. Everyone will top up their small holdings On-market.

You are dreaming. it will open around $1.80 if not more beagle boy

So National told us that Mum and Dad investors could invest in these assets.......and when they try to buy shares, they are heavily scaled back. What a disgrace!
And to think that overseas investors get 12% of the shares sold. No wonder Mum and Dad investors are put off the NZX. The rich get richer and the poor get....... Thanks National! NOT

How did they know who was rich and who was poor I wonder? I thought 'the rich' got scaled back too.

The rich had the money to apply for large parcels knowing after scaling they would end up with close to what they wanted!

That's nonsense. Most applicants ended up with $5000 worth regardless of whether they applied for 100k worth, or 10k worth. They were capped and scaled.

The smart ones bought in all family member names.

Note that 20% of the chunk went to NZ institutions which will largely include KiwiSaver funds which invest the savings of mums, dads, queers, rednecks, grannies, kids, bogans, nerds and whatever other stereotype group you care to mention.

The govt has two aims:

1) Get a good price for the power companies. Big institutional investors - especially those in Australia, are best-placed to bid high.

and

2) Encourage more small investors into the market. That's good for the economy at time when so many people have a property-only focus. And it makes the whole partial asset sale process more politically palatable if shares go to everyday Kiwi investors (at least, as long as you ignore the fact they can onsell their shares to anyone). Share bonus bribes and artificial restrictions on stock allocation have been required to reel in these mum-and-dad investors.

1) and 2) are both good aims, but they're not mutually compatible.

Disagree. They brokers and funds set the price in the bookbuild - they should have been told that if they set it too low that the public wanted heaps, they would be scaled, not the public.

They set the price and are now rewarded. If you see parcels of over $5k going though, it isn't the M&D!!!!

So mum and dad investors are put off the NZX.... And 62000 invest in Genesis hence it is heavily scaled back and it's the National Party's fault.....that's about as ridiculous as the Hone & Kim party

You can blame the toxic duo Green/Labour parties for the type of thing you are complaining about.Their fear tactics on the eve of the 49% share release in power companies, is estimated to have cost the country's investors overall at least ONE BILLION DOLLARS,as well as our balance of payment deficit,not forgetting the opportunity to improve our country's infra structure.Yes blame the mentioned parties ,who are hell bent on turning our economy back at least 40 years to the poverty stricken induced WE KNOW BEST SOCIALIST MENTALITY of CIRCA 1972_1975 ..

Labour and the Greens stuffed up the first two, National stuffed up this one.

Get in boots and all and buy as many as you can afford. The price will go up with out a doubt. With such a high interest payout it is a no brainer.

Overseas investors actually got 23.5% of those available for sale, while the general public got 18%. Work out for

Typical - people complain when few people subscribe and then complain when a float is too successful. Opposition for the sake of opposition isn't a pathway to government.

Nice to see the good old Kiwi naysayers out in force...GNE is a good business - solid customer base, good spread of generation assets (10-15+ reserves at Kupe), and some decent management, no big capex planned for immediate future and strong free cash flows. At 1.55 this company was a bargain, it won't slide. And with 10%+ div yield and the 1/15 bonus, you would be silly to pass this up. I would have liked to have invested more, but that's not the end of the world. Bring on listing time!

Nice to see you on here Bill English