Genesis Energy to list at $1.55 a share to raise $736m
Genesis Energy shares will list on April 17 at $1.55 a share, at the high end of the value range of $1.35 to $1.65 a share nominated for the sale of up to 49 percent of New Zealand's largest electricity and gas retailer by customer numbers.
The issue price was announced this evening at the Beehive by Finance and State-Owned Enterprises Ministers Bill English and Tony Ryall following a book-build exercise involving local and offshore financial institutions, who bid for rights to up to 40 percent of the company.
The remaining 9 percent will be available for members of the public to bid for from one minute past midnight on March 29. Small investors will also be able to access share allocations through sharebrokers and institutions that gained shares from today's book-build.
The $1.55 share price gives an gross dividend yield in the 2015 financial year of 14.3 percent, based on prospectus information.
It values 49 percent of Genesis at $736 million and will bring to a total of $4.7 billion the proceeds from four partial privatisations undertaken in the last 13 months.
Those sales saw 49 percent of the state-controlled power companies MightyRiverPower and Meridian Energy sold into private hands for $1.7 billion and $1.9 billion respectively , and reduced the government shareholding in Air New Zealand from 74 percent to 51 percent for a return of $365 million.
They were preceded by attempts through to courts by Maori interests to block the sales by asserting the need to settle historical claims under the Treaty of Waitangi relating to freshwater rights before the sales occurred. The Supreme Court ultimately rejected those claims.
In all cases, the government remains the controlling shareholder with 51 percent of the companies held on behalf of taxpayers. Prime Minister John Key has said there will be no more such asset sales, which his National Party campaigned on at the 2011 election. A citizens initiated referendum last November found some two-thirds of those who voted opposed the policy.
The policy was initially to have raised between $5 billion and $7 billion, but the near commercial failure of state-owned coal miner Solid Energy saw that company removed from the programme. In the electricity sector, threats to the long term future of the Rio-Tinto aluminium smelter at Bluff - the country's largest single power consumer - and Opposition party policies to dismantle current electricity market arrangements affected the valuation of MRP, Meridian and Genesis to an unknown extent.
The government is hoping this last act of the "mixed ownership model" programme will prove more popular with investors than last May's MightyRiverPower sale, which attracted some 113,000 individual investors and the Meridian Energy float in November, which attracted just 62,000 investors.
The Genesis offer has generated more positive commentary from the investment community than the previous two electricity company floats, in part because the company is offering what broking firm Forsyth Barr has described as a "turbo-charged" dividend yield in the first two years, and a one-for-15 bonus share offer for shareholders who keep their stock for at least 12 months.
The government has guaranteed that New Zealanders will own 85 percent of Genesis when it floats on the NZX on April 17, including the 51 percent it will continue to own, although there is no prohibition on private shareholders selling shares to foreign investors following the float.