Dual listing may hit Kiwi investors
Mighty River Power shares could be listed on stock exchanges on both sides of the Tasman to boost investment from Australian institutions, making shares more expensive for Kiwi investors.
With the scheduled date of the first state-owned enterprise float just a few months away, where the shares will be traded remains undecided.
Mighty River is being partly floated later this year, with the Government planning to sell 49 per cent of the company to the public. Similar sales of Meridian, Genesis and Solid Energy are planned over the next three to five years.
The joint lead managers – investment bankers helping Treasury arrange the sales – are understood to be pushing for a dual listing, with Wellington-based NZX as the primary exchange and a secondary listing on Sydney's ASX.
Most of New Zealand's largest public companies are listed both in New Zealand and Australia, with the ASX giving access to a larger pool of investors, including some fund managers which can invest only in stocks listed in Australia.
The argument is that a dual-listing of Mighty River will yield the best price to the Government by maximising interest and creating "price tension".
However, the Government has repeatedly said it wants to encourage a high level of local ownership, which it expects to be 85 to 90 per cent.
State-Owned Enterprises Minister Tony Ryall would not discuss the issue, saying no decision had been made on an Australian listing.
Green Party co-leader Russel Norman said an Australian listing "clearly undermines the argument about maximising New Zealand ownership, when they will be facilitating Australian ownership".
The cost of a dual listing is estimated to be $100,000 a year, and adds disclosure and reporting requirements.
At a lecture at Victoria University earlier this year, NZX chairman Andrew Harmos publicly implored Finance Minister Bill English not to increase the cost and complexity of the process.
"The advice you'll get from your bankers is list it on this foreign market, list it on that foreign market. You don't need to list it anywhere other than NZX," he said.
Craigs Investment Partners' Mark Lister said that, while an Australian listing could create greater interest and liquidity in Mighty River, it would not necessarily lead to major Aussie shareholding if the shares were initially in Kiwi hands.
"My guess is the local investors and KiwiSaver funds will be pretty sticky with their shares, and won't sell out for a moderate capital gain."
Fletcher Building spokesman Philip King declined to speak on the state-owned asset sales, but said generally it was logical for large Kiwi companies to list on the ASX, to give greater access to investors and analysts.
"Once you get to a certain size as a listed entity you need to be looking beyond New Zealand to provide equity capital, and Australia is definitely the most obvious and logical market."