Goldmans, Macquarie, Bell Gully emerging winners in asset sales advice
The local arms of global investment banks Goldman Sachs and Macquarie have been picked for the plum job of lead managing the Meridian Energy partial privatisation, with New Zealand law firm Bell Gully picked as the government's legal adviser.
All three won the same positions in the Mighty River Power float.
Goldmans and Macquarie Capital are joined in the Meridian process as joint lead managers by the New Zealand branch of Deutsche Bank, which acted as an adviser to the government in the MRP float and whose local broking arm, Craigs Investment Partners, was a retail offer manager. This time, Craigs is part of the JLM syndicate.
Joint lead management is especially lucrative because it combines an up-front payment, incentive payments for certain outcomes in the float and a percentage of the proceeds of shares sold to local and foreign institutional investors and to retail investors in New Zealand.
First NZ Capital was a JLM in the $1.7 billion MRP float but has missed out at this stage on a role in the much larger Meridian float, which can be expected to raise $2.6 billion or more for 49 percent of the country's largest electricity generator.
Meanwhile, Treasury has appointed UBS New Zealand, which had no formal role in the MRP float, to assist with preparations for the sale of up to 49 percent of the smallest of the three state-owned or controlled power companies, Genesis Energy.
No decisions on timing
"No decisions have been made on the timing of that transaction, and further JLM's may be selected in the coming weeks," a Treasury statement on the appointments says.
In the MRP float, JLMs were each guaranteed a $666,666 payment, with the potential to receive up to $1.3 million each extra if they met agreed performance criteria relating to agreed value and demand targets.
It is unlikely those targets were fully reached in the case of the MRP float, in which many investors scaled back or abandoned their interest after the announcement of the Labour and Green parties' policies to scrap current electricity market arrangements and return to central planning, regulation and price-setting.
That saw lower retail investor uptake and almost certainly a lower issue price, at $2.50, than the government had hoped for, having set a range for the issue price of between $2.35 and $2.80.
In addition, the three MRP lead managers were able to share in payments set at 0.4 percent of the proceeds of sales to local institutions, 0.8 percent of the proceeds of sales to international institutional investors, and 0.2 percent of the proceeds of the retail investor float.
One of the key roles of the JLMs is to advise on the best way to structure the Meridian partial sale, which is bound by the government's political commitment to ensure the company is between 85 percent and 90 percent New Zealand-owned on the day shares are allocated.
While the government helps that total by continuing to hold a 51 percent controlling stake, around one-third of the remaining shares must be sold to New Zealand institutions, such as KiwiSaver funds, and retail investors.
Prime Minister John Key signalled yesterday that the Meridian float could yet be undertaken in two tranches because of its size.
The sale is timed for later this year, subject to market conditions.
If the sale were done in two chunks, that second might not be until early 2014, an election year, and could push a partial privatisation of Genesis – valued in total at around $2 billion – beyond polling day, making its sale dependent on re-election of a National Party-led government.