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Greens say majority of Mighty River shares offered to retail buyers went to a select few, with just 400 wealthy investors snapping up 10% of them

Greens say majority of Mighty River shares offered to retail buyers went to a select few, with just 400 wealthy investors snapping up 10% of them

The Green Party has gone on the attack over the recently partially-privatised Mighty River Power (MRP), saying that Greens' research shows that large numbers of the shares ended up in very few hands.

Greens co-leader Russel Norman said that its research, which he said was confirmed by Treasury, showed that half of the shares in Mighty River Power that National sold to retail investors went to just 13,000 people and that 10% of the retail shares went to "just 400 wealthy people and organisations".

"The sale of Mighty River Power saw 113,000 retail investors, referred to as ‘mum and dad’ investors by the National Government, buy 26.9% of the company. Analysis by the Greens and Treasury shows that half of those shares were, in fact, purchased by fewer than 13,000 people who bought an average of nearly $35,000 worth of shares.

"That included a select group of fewer than 400 individuals, trusts, and organisations who bought 10% of the retail shares with an average investment of nearly quarter of a million dollars each. The remaining 101,000 retail investors bought only 13.4% of the company – less than the amount taken by overseas institutions."

The MRP shares were sold earlier this month at NZ$2.50 a share, raising NZ$1.7 billion for the Government.

The final figure of 113,000 investors came after some 440,000 had actually pre-registered interest in buying the shares.

However, in the meantime between that occurring and the offer actually launching, the Greens and the Labour Party had unveiled their policy for a single electricity buyer, which undoubtedly deterred at least some investors.

The Government's pressing ahead with plans to sell 49% of the largest state electricity company, Meridian Energy, later this year. Based on the most recent valuations, this sale, if well supported, could raise in excess of NZ$3 billion for the Government to go toward its target of raising between NZ$5 billion and NZ$7 billion for new state assets.

Norman said that National’s "myth" that it sold MRP to ordinary New Zealanders "has been well and truly busted".

"[Prime Minister] John Key’s ‘mums and dad investors’ line was a con.”

Norman said "the truth" was that 98% of New Zealanders bought no shares at all.

"Half the retail shares went to just 0.3% of the population, and a tiny group of just 400 wealthy individuals and organisations got 10% of the retail shares."

Norman said that National’s asset sales "have been a failure in its own terms".

"The hundreds of thousands of eager buyers that Mr Key promised didn’t show up, so he sold the shares to a small number of wealthy people instead. The shares are not widely held; they are overwhelmingly concentrated in the hands of a few."

Norman said "far more" New Zealanders had signed the petition for a referendum on asset sales than bought into Mighty River Power.

"National should cancel the remaining the asset sales.”

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29 Comments

What about Kiwisaver accounts. Are you too thick to mention this Russell?

Also, the Kiwipower announcement would have spooked people as well.

BTW, is it not good the NZD is falling, we did not need to print like Norman Parker want to do.  Manufacturing crisis is over.

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Same bunch who prob own 50+ rental properties

Problem is people vote for a carrot they will never get to eat

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Problem is people vote for a carrot they will never get to eat

 

Bingo!!!  Now we just need to turn that public failing into getting what we need from the system rather than what we think we might like, but can neither afford nor comprehend - a difficult bumpy ride.

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I am now curious about the "new investors to the market" that were talked about, and the relationship to shares bought (let alone if the "new investors" were real people).

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I'm one.

 

I can Fog a Mirror.

 

That must mean I'm 'real'.

 

Rentals owned:  0

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I see that the Oz greens are onto this lark now too. Not sure if that is in response to proposed asset sales or whether they are after wealth destruction just for the hell of it...

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10% of the retail shares went to "just 400 wealthy people and organisations".

 

They were duped - bought a pup with incompetent management - got what they deserved - rule # 1 follow the money not the dogma - rule #2 there are no other rules.

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I still wonder how many of those wealthy 400 are the PM, the cabinet, and other politicians (to deversify the funds of their upcoming overseas retirements, which cannot happen soon enough), whlie they pressure for ever increasing power rates for the general public.

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I think the valuations on these shares is a little high so if 400 wealthy people bought them then good luck to them.

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I see Joan Withers (Director) bought 12,500 shares on market at $2.57 - transaction dated 16 May 2013 according to NZX disclosure.

Good to see a Director buying up stock.

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Didn't the taxpayers pay her to buy the shares? Read more

 

Who is the greater fool?

 

Hefty pay increases to the directors of Mighty River Power have created a precedent, with similar increases for directors at other state owned enterprises now inevitable, Labour says.

 

The Government announced that the annual fees for directors would increase by 73 per cent to $85,000 a year. Chairwoman Joan Withers will see her fees increase by more than 50 per cent, to $150,000 a year.

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Stephen

No-one held a gun to her head and said she had to buy the shares - maybe those that did not buy into MRP are the fools? Time will tell I guess.

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Who said they did?  - but did we get any choice about her emolument increase?

 

maybe those that did not buy into MRP are the fools? Time will tell I guess.

 

Time is money - there are better investments out there making positive daily capital returns - this is a losing investment, it needs to be cut - one has to assume the opportunity cost of capital approach here - everything is financed and therefore it is eating it's head off in carry costs, or lost opportunity of return - minus the expected dividend

 

Henry_Tull even got the finance quote from ANZ.

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I wonder what scared away Mom and Pop investors...  Oh I remember, Norman threatening to nationalize the industry and costing the country (tax-payers) millions by devaluing our asset just before a sale. 

 

I hope he's proud of himself. 

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The other explanation is that so-called Mom and Pop investors recognise a bad deal when they see it.  

And by the way Norman didn't threaten to nationalise the industry.  That is just another smear from the dishonest autocratic government we have.

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Im pleased with him, he threw a spanner in National's works, and Im sure he's well chuffed. 

NB The asset hasnt really changed in "value", its income is the same as is the book value of its assets, all thats changed is the ability to gouge the less well off via a monopoly  ie the rest is make believe.

regards

 

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I suspect the figures may be 'worse' than the greens say.  Many trusts purchased shares under multiple benficaray names to ensure they got a large enough parcel.

Whether you are or or against, this sale of assets has become a farce...only the the chosen few who are clipping the ticket as the chairs are shuffled have gained from this.  To proceed with any more floats under the current conditions is just nuts. 

 

 

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Dont Believe anything the greens say and you will do ok..

 

"mum&Dads "bought nearly 54%of the shares on offer (about101000 of them)

Norman tries to confuse the public by alternating between % of shares sold & the% of the company as a whole(remember govt still owns 51%

 

 

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3.4 million shares have sold this morning at an average of $2.50. Currently available for $2.49.

Still, they should never have been sold, and most certainly the next companies should be withdrawn.

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An Alternate view, I copy/pasted this from WhaleOil blog.

 

The Green Party says that shares sold in the recent float of Mighty River Power went to only a small group of investors – and claims of widespread ‘mum and dad’ ownership are false.

They say half of the shares in Mighty River Power sold by the Government went to just 13,000 people, with 10 per cent going to just 400 individuals, trusts and organisations.

Those numbers are demonstrably false and they know it. But Russel Norman continues with his envy attack:

Green co-leader Russel Norman said today that while 113,000 investors bought 26.9 per cent of Mighty River, half of those went to fewer than 13,000 investors who bought an average of nearly $35,000 worth of shares each.

“That included a select group of fewer than 400 individuals, trusts, and organisations who bought 10 per cent of the retail shares with an average investment of nearly quarter of a million dollars each. The remaining 101,000 retail investors bought only 13.4 per cent of the company – less than the amount taken by overseas institutions, ” said Norman.

The real numbers are at the bottom of the article but to get there you have to read all the Green spin.

Total value raised by Govt in float – $1.7b

Number of NZers who bought shares – 113,000
Number who pre-registered – 440,000
Average value of shares purchased – $8220

Percentage of shares staying in NZ hands: 86.5pc – $943m
Percentage owned by NZ ‘retail investors’ – 26.9pc
Percentage owned by NZ institutions – 8.6pc – $300m

Percentage owned by overseas institutions – 13.5pc – $472m
Applicants without a CSN – (suggesting first time investors) – 68pc

The Greens obviously do not want the population owning shares, unless it is in their pet projects. You would have thought they’d be supportive of Mighty River Power because they use renewable resources almost exclusively to generate their power. For the Green taliban though they’d prefer everyone to live in poverty and not be aspirational at all.

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NoVictim,

You say the Greens numbers are demonstrably false, but don't show where or how. Their numbers appear to stack up to me; unless the figures they state but that you haven't highlighted are just not true. If 400 entities have bought 250k each, that amounts to $100 million out of the retail amount of $933 million; in fact over 10% of the retail amount. 

I believe the Greens like MRP a lot, and would strongly have preferred for all New Zealanders to have carried on owning 100% of the shares in the company. Now all NZers own only 51% of them, 100,000 New Zealanders own 13%, a separate 13,000 New Zealanders own 14% including 400 people who own 2.8% between them; while foreigners own 13%. The wealth destruction from a NZ point of view therefore has been 100% caused by the government selling the asset, unless you believe that the same board and management are going to magically run the company a lot better. 

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The funny thing is that if you read the Green's actual press release you will see that Whale Oil's inability to even report a press release accurately shines through again.

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I agree, that's par....but he isnt a reporter, he's right wing blogger.  Ive been to his site a few times and the ppl who post there live in la la land....even more than some in here.

regards

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Very sad if this news item is true. JK & BE have sold us a tall story...if this is true.

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MRP $2.470 being -$0.040 / -1.59%   Trades: 265 https://www.nzx.com/markets/NZSX/securities/MRP   or for a less flattering price chart:   http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&allinfo=&a…  
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Yet contact are $5.20....so why is MRP worth so much less......

regards

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733m Contact shares vs 1.4b MRP shares.  Similar market cap.

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What were the advisors thinking (not the little man):

The word is that officials reckon the Mighty River float went well. They are kidding themselves. They should do a survey on why so many people expressed interest, but didn't proceed.

Although it's tempting to put all the blame on the new political party, Green-Labour, for throwing a spanner in the works with its plans for a massive electricity sector shake-up, there were other, more mundane reasons why so many failed to apply.

 

http://www.stuff.co.nz/sunday-star-times/business/latest-business/86917…

 

The need to meet United States regulatory requirements has been blamed for the secrecy and the production of the huge, off-putting and costly prospectus that few investors have read. People were told they could download it on home computers, though its sheer bulk would have blown up most household printers.

Apparently it was decided not to produce a short-form, more user-friendly prospectus because it would be overly simplistic.

The application forms - even for people who regularly take up new issues - were difficult to follow, and tough for first-time investors. Some were confused by the unusual requirement to provide their CSN and FIN numbers. Others, including those who consider themselves computer savvy, had difficulty downloading the prospectus application forms.

Some brokers were unhappy at providing hours of free advice to clients and intending investors, only to find they earned no fees, as downloaded application forms did not include brokers' stamps, on which commission is paid.

 

 

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What were the advisors trying:

One common trap is to think of the electricity generators-retailers as utilities. Utilities, such as the electricity lines and gas network companies, are typically low-risk businesses offering investors stable and often regulated returns...

The electricity generation and retailing market, however, is a risky business and companies can, and do, get into financial difficulty.......

 

http://www.tdb.co.nz/documents/reports/290413-how-risky-are-the-electri…

 

... it would be a mistake to think of them as low-risk utilities

 

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