Chief tips SOE shares to stay Kiwi

Growing savings pools in New Zealand, and offshore financial turmoil, mean shares in state-owned enterprises will be held mostly within the country if they are privatised, a leading fund manager says.

National has said it will sell up to 49 per cent of Meridian, Mighty River Power, Genesis and Solid Energy if it is re-elected on November 26.

Sam Stubbs, chief executive of Tower Investments, said a steadily growing pool of KiwiSaver funds would be attracted to the state-owned companies that might be floated, because of a long-term focus and consistent dividend streams.

"The majority of these companies will end up predominantly held by New Zealand owners," Stubbs said. Tower manages about $4 billion for clients.

"You will slowly see over a period of time the Kiwi ownership of these things being probably higher than what a lot of people think."

For international investors, New Zealand tended to be a "risk on" market, meaning money flowed in when investors were confident about international financial markets, Stubbs said. In the medium term, foreign money might be repatriated home because of debt concerns or to recapitalise financial institutions.

Tower's board of directors this week approved a plan to double the fund manager's investment into New Zealand shares to up to $400 million, reflecting a bullish view of domestic conditions compared with elsewhere. Though the decision was made irrespective of whether the asset sales went ahead, Stubbs said the companies in line to be partially privatised were of interest to Tower.