A London fund manager owned by a major United States bank bought at least 2.8 per cent of Meridian on its first day of trading, prompting claims the sale is a slide to foreign ownership.
Bank of New York Mellon revealed yesterday that its London subsidiary, Newton Investment Management, bought more than 72 million Meridian instalment receipts in a single transaction on Tuesday.
Newton, which made several purchases this week, now holds more than 100 million Meridian units, meaning it effectively owns 4 per cent of the company.
It is unclear who sold the shares to Newton or at what price, but once trading started Meridian's units quickly rose to $1.06, suggesting the seller made a profit of several million dollars.
The units have since risen to close at $1.09, meaning Newton is also sitting on a paper profit.
Labour state-owned enterprise spokesman Clayton Cosgrove said the increase showed that foreign ownership could increase quickly.
"From day one, the trend was there, the overseas interests were in there buying."
Green Party co-leader Russel Norman said the stake showed that the sales were a route to foreign ownership.
"Profits from Mighty River and Meridian will flow offshore to companies like the Bank of New York Mellon, increasing our current account deficit and international debt."
Last month the Government said it was selling more than 1.2 billion Meridian shares at $1.50 each - the bottom of the range it had indicated it was looking to sell at - with 50c of each share due in 18 months time.
The sale of 49 per cent of Meridian, New Zealand's largest electricity generator, raised $1.88 billion for the Government.
Finance Minister Bill English denied the process led to foreign ownership.
"It's rubbish to suggest the share offer programme is a route to foreign ownership of Meridian and other companies in the [mixed ownership model] programme," a spokesman for him said.
"In this case, we're talking about less than 4 per cent of Meridian's shares and it's not clear how many of these shares were sold by overseas investors."
Meridian said that it welcomed the interest of Newton, which manages assets worth just under $100 billion on behalf of clients from offices in London and New York.
"I'm delighted that a fund manager of Newton's status is demonstrating confidence in Meridian through this investment," chief executive Mark Binns said.
- © Fairfax NZ News