By Alex Tarrant
New Zealand 'mum and dad' investors are the number one priority for Prime Minister John Key when it comes to share allocations from the 49% sell downs of four state-owned energy companies.
But that doesn't necessarily mean Kiwis will be allocated 100% of the shares sold in Mighty River Power, Genesis, Meridian and Solid Energy, as allocations will for some part depend what investors initially offer for the shares.
The government yesterday tabled legislation to allow the partial privatisations of the four energy companies to proceed, but despite repeatedly saying New Zealanders would be 'front of the queue' when it came to share allocations, the legislation did not touch upon ways to ensure this.
Key told media in Parliament Buildings on Tuesday that the legislation did not need to stipulate New Zealanders would be at the front of the queue. Rather, that would be determined by how the companies’ book-builds were handled by the investment banks managing the floats.
“We’ve had extensive discussions with [the managers], and made it absolutely crystal clear what our expectations are. That’s an administrative matter, not something you put in legislation,” Key said.
A 2010 Treasury paper to Cabinet recommended that, even though the government would prefer to sell shares to New Zealand investors, potential overseas investors should also be canvassed during the book-build process in order to get the highest possible price for the shares. There are also worries about 'stagging' by overseas investors, a process where they immediately offer to buy shares allocated initially to Kiwis for a higher price than at the initial public offering.
There will also be a cap of 10% for any one shareholding, excluding the government's 51% holding. Government Ministers have said they expect 85-90% of the companies' shares to be held in New Zealand ownership, including the government's stake, meaning up to 30% of the shares sold in the companies could end up in foreign ownership.
Some in the investment banking industry have told interest.co.nz they expect Mighty River may even be sold at a discount to ensure full New Zealand ownership of the company to garner interest in the other floats.
'Number 1 priority'
The government's intention was to have “mums and dads...absolutely at the front of the queue,” Key told media on Tuesday.
“They’re my number one priority, and we will make sure that we will be setting that at a level where it’s affordable for a lot of New Zealanders,” he said.
The share prices would already arguably be discounted because the government was going to keep the companies under majority control.
“But how you actually sell – how you build the book and who gets to buy those shares – is a matter very much for the government and the way the managers fulfil their obligations to the government," Key said.
“What we’ve said is, when it comes to Mum and Dad, if they want to buy 1,000 shares or whatever it might be, I want to make sure that they get their allocation, they’re not scaled, and they’re at the front of the queue,” he said.
Front of the queue meant New Zealanders “may be able to” be allocated all the shares in the companies they applied for before any foreign investors were allocated shares, Key said.
30 Comments
Which 'mums & dads' exactly? Probably these ones...
http://kumararepublic.blogspot.co.nz/2011/11/mum-dad-investors.html
Oh yeah they will "garner" like crazy...right up to when the last SOE flog off is done and dusted....then....down they go as the divs are clipped and trimmed...how stupid can people be to think the SOEs in govt ownership and govt control will dish out the profits in divs like bonuses to bankers....give me a break.....
The directors will be under orders to harvest the loot for capex cos the majority shareholder aint gunna inject no loot no more....easy peasy...divs are chopped including to the govt and the capex is accumulated....share prices drop and drop like all other NZ companies right.....then in comes Labour and hey presto the shares are bought back with borrowed loot at half price...then the divs go back up again....magic...all legal theft too.
I assume initially greed and stupidity will reign....then the fallout.....So the price will be too high but ppl will buy anyway looking to flick on fast.....their buyers will be looking to do the same thing etc etc til the prices "suddenly" drop.....rinse and repeat.....
Not so sure on the capex, I think the Govn will want to maximise the dividends...if anything they will care less on the capital value, they'll will own a lot less of it......
Longer term I suspect as globalisation dies we will simply Nationalise our core infrastructure back. We wont care what those outside of NZ think....and our Pollies will know if they dont do it they wont be in the comfy seats for long....
regards
Pump and dump Steven...count on it....hey you might be right...Labour could nationalise them after waiting for the share price to collapse...exchange govt bonds for the shares at the market rate...cents in the dollar...haha...then hike the power charges and cream off the returns...clear the deficit and come out smelling of roses....
For lot’s of mum’s and dad’s – a smiley and waving grand dad - is a great grand dad.
I agree.
It sucks that I would have to buy something I already own, and contributed towards, in order to still own it.
It sounds like a real scam to me!
If anyone said I had to pay for my income earning businnes I own all over again, when I alreday owned it I would ask what the hell were they own about and be rather pissed off to say the least
Oh but its going into schools and hospitals? year right!
Will end up in one big untraceable slush fund!
If the assets are kept as ours we will be very glade in future they were kept.
"New Zealand 'mum and dad' investors are the number one priority for Prime Minister John Key when it comes to share allocations...".
"...repeatedly saying New Zealanders would be 'front of the queue' when it came to share allocations...".
"...that would be determined by...the investment banks..."
It looks like we have to hope the investment banks choose to put 'mum and dad' investors before their own interests. I'm not as hopeful as John Key. Perhaps the bankers no longer chase the top dollar, or is JK is gullible? Or is someone having us on?
Lets face it, that the so called mum and dad millionaires are going to sell the stock to the highest overseas bidder at the first chance. So the government should not subsidise the SOE share prices for anyone. They should be trying to get the best possible price without losing control of these assets.
You must be joking. "Mum and Dad" investors? Most NZ "Mum's and Dad's" can't afford to save a deposit for heir own property, let alone find a chunk of change to purchase shares in something they technically already own.
We're actually talking about "Grandma and Grandpa" investors, baby-boomers who already own most of this country's wealth.
Wouldn't the best approach to truly get the shares into 'Mums and Dads' would be to allow the Kiwisaver funds some sort of priority in the bookbuild?
This way, everyone with Kiwisaver (lets face it, virtually everyone) has some allocation in their portfolio. The token 1000 shares here of there would be OK in a society of shareholders, but that doesn't describe NZers.
You live in a one party state your vote is for a CROWN Represantative
Your vote has nothing to do with the illusion of labour and national for illusion is all they are. A Crown representative is a Crown representative they represent a private corporation which has absolutly nothing to do with your inherent rights as a soveriegn human being!
Alex
You read the comments and it looks like a clean sweep against the selling of these dams etc. My question is do you think that interest.co.nz readers are out on there own on this one or do they reflect the wider public mood? If they do it seems amazing that the Nats are blindly going ahead with this. It feels very strange.
Presently only Meridian pay a one-to-one (retail price) for the excess power produced (i.e. that fed into the grid) by grid-tie home generators. The rest pay homegen producers a wholesale rate.
I can see that (Meridian's homegen price schedule) being one of the first issues on the private sector Board agenda.
Policy/sustainability wise - NZ is really going backwards with this asset sales intention. With an abundance of sun, wind and water - there can be no more strategic an asset than electricity production and distribution - as we'll have to convert most of our transportation to electric power someday I would imagine.
The CROWN Corporation what is it? Who owns it? It has shareholders thats for sure, who are they?
Id suggest you all start getting informed about your inherent rights! It would seem that if you are born in NZ with a NZ birth certificate that you are also perhaps a trustee of the Crown Corporation.
That would follow that your IRD number is your Crown account bank number and all the funds the Crown owe you are there.
Remember in NZ the government is a business a "corporation" so when you all go and vote it is not for someone who represents you as a human you are voting for a CROWN Representative, get informed people and you may discover that The government which is the Crowns representatives is breaking their own law of contracts.
For starters in Contract law full disclosure! How many know this stuff? After all we have not had full disclosure about our statutory rights as trustees of the Crown.
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