Genesis dividends the drawcard
Analysts at sharebroker Forsyth Barr have described the Genesis Energy share offer as "very attractive on first glance".
In a research note dated yesterday, Andrew Harvey-Green and James Bascand said dividends were the big drawcard for Genesis shares, describing the payout as "turbocharged".
Genesis "is pulling out all stops to give investors a good experience", they said.
With a 12-month price target of $1.62 a share, Genesis could produce a total return for investors of 24.8 per cent in the first year, they said, taking into account the forecast dividend and the bonus share offer, assuming a float price of $1.50.
The Government has indicated a likely price range of $1.35-$1.65 for Genesis, with the final price to be set by a book build on Friday next week, the day before the offer opens to the public.
Investors who hold their shares for a year will get one extra share free for every 15 they hold, up to a maximum of 2000 bonus shares.
The float of the state-owned electricity company is expected to raise between $405 million and $808m for the Government, which will retain at least 51 per cent of the company.
Harvey-Green and Bascand said the dividend had been "pushed hard", however, and there were some weaknesses. They cited the finite income from the company's Kupe oil and gas field and the profile of its thermal generation.
At a float price of $1.54 or below, they rated the shares "outperform". At $1.55 or above they gave them a "neutral" rating.