Sale of Powerco 'entirely rational choice'

Telecom CEO Simon Moutter.
Telecom CEO Simon Moutter.

A former Powerco chief executive says the New Plymouth District Council's decision to sell its stake in the electricity company and diversify its investment portfolio was a good one.

Back in the 1990s Simon Moutter, now Telecom's chief executive, played a part in morphing Powerco into a company worth more than $300 million.

The council then owned 45 per cent of Powerco, which it controversially sold in 2004 to Australia's Prime Infrastructure for $364.7m.

It was a move that stirred tension in the community at the time and that tension still rears its head today when discussion turns to how the money, which is now the council's Perpetual Investment Fund (Pif), is handled.

"It's a matter of history today, but my view of the New Plymouth council was over many years they adopted a very commercial strategy to maximise the value of that investment," Moutter said during a visit to New Plymouth yesterday.

"I think the execution was flawless."

He said the decisions made by Powerco management as it headed down a "bold expansion path that massively increased the value of that shareholding" were backed by the council, which he said elected an entirely sensible time to sell.

"The cash in the tin, well managed and well invested, will create probably a higher value stream of income and security for the community over a long period.

"I would say it was an entirely rational investment choice to grow it and then to exit it at an appropriate time.

"It's rational to move from a very large pot and a single investment that becomes fully valued at some point to a more diverse portfolio," Moutter said.

Ironically, in 2008 Taranaki Investment Management Limited (Timl), the council-owned entity that manages the Pif, began to put money into dairy farms in Tasmania.

Today, almost 70 per cent of the fund is tied up in Tasman Farms, which reported a $10.3m loss last year.

That heavy investment has led to accusations Timl's portfolio is not sufficiently diverse.

Originally worth $259m, the Pif peaked in value at $324m in 2008 but is now worth $212m.

Since its creation, $169m has been spent by the council on everything from the Coastal Walkway and Waitara sewerage pipeline to the water that comes out of the district's taps.

Advocates say it has allowed New Plymouth to have the highest service level in Taranaki while maintaining the lowest rates.

Moutter said he was unable to comment on the investments made by Timl as he was unfamiliar with the decisions made regarding the Pif.

Taranaki Daily News