Meridian price seen at low end
Institutions are picking a price for Meridian shares at the low end of the scale as the Government seeks to avoid a poor performance post-listing.
The share offer closes on Friday [subs October 18], while the institutional bookbuild and price-setting takes place next week.
"I think they're going to make sure that it goes," said one fund manager.
"I wouldn't be surprised if it's done at $1.50 to $1.55 [a share]. At those prices we think it's fine."
The view was echoed by another institutional manager.
"The work we've done suggests to have a decent upside [the price] needs to be at the lower end of the range," the manager said.
"I'd be very surprised if it went higher than $1.50 to $1.55."
The Government's offer document indicated a potential price range of $1.50 to $1.80 a share for Meridian, valuing the electricity generator and retailer at $3.8 billion to $4.6b.
Retail investors have been promised a maximum price of $1.60 a share, split into two instalments of $1 now and 50 cents to 60c in May 2015.
So far 565 million shares have been allocated to retail clients of sharebrokers, while sales to the public pool are said to be tracking at $15 million to $20m a day.
Demand is seen as easily enough to achieve the Government's goal of selling down to about 51 per cent ownership, leading to a likely shortage of stock for local institutions.
"I have no doubt that will occur," said a fund manager.
"They'll try and keep us short again, but we've learned things from the last time."
Not that everyone is concerned about that.
Although Meridian was a good business with some attractions, "I'm not too worried about what we get," said another fund manager.
"We've got plenty of opportunities in the sector. I find it fascinating in these processes, the hype trying to stampede you into action from a fear of missing out."
Meridian chief executive Mark Binns is making one last trip to Australia this week to spruik New Zealand's biggest power generation company to potential Australian shareholders, the Australian Financial Review reported..
When the bookbuild to allocate shares takes place next week and Australian investors have a chance to get their hands on up to $400 million worth of stock.
Binns will meet investors for two days in Sydney this week, and another day in Melbourne, before heading to Asia, the AFR said.
- © Fairfax NZ News