Mighty River shares likely on sale by September

VERNON SMALL
Last updated 05:00 04/07/2012

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Shares in Mighty River Power are expected to be offered for sale by September, with the former state-owned enterprise listed on the stock exchange in late October or November.

With the legislation opening the door for the sale passing its final vote in Parliament last week, officials have stepped up preparations for the float of the power company.

It will be the first of the Government's planned assets sales. Up to 49 per cent of Genesis, Meridian and Solid Energy, as well as Air New Zealand, are set to follow over coming years.

It is understood Treasury will set a reserve price on the float, which is expected to return about $1.8 billion to the Government for the 49 per cent share on offer. It will pull the plug if the price achieved falls short or if a global crisis hits sharemarkets.

The price is likely to be set at a level that will deliver a dividend similar to other comparable listed shares of about 4 per cent.

Prime Minister John Key has pointed to the estimated $110b in bank term deposits that could be a source of investments in the shares, with the Government keen to ensure as many small Kiwi investors as possible buy into the company.

He has also signalled plans for a minimum application amount of about $1000 with small shareholders guaranteed to receive up to a set value of shares, likely to be between $2000 and $3000.

Ministers are also considering incentives to encourage investors to buy, which could include bonus shares for those who hold shares long term, a cap on the price retail investors would pay, a discount on the float price or extra shares for those who pre-register their interest.

Treasury has made no recommendation on the options.

The final price will be announced a few weeks before the listing, after a "book-building" process that will assess demand from big institutional investors.

If the Mighty River float is successful it will be followed by Genesis or Meridian, probably by mid-2013.

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- © Fairfax NZ News

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