Mighty River Power bookbuild needs to be conducted in way to maintain interest in SOE shares from range of bidders, English says

The government needs to conduct the book-build process for the sale of shares in Mighty River Power (MRP) in a way that will maintain interest in mixed-ownership company shares across a range of bidders, Finance Minister Bill English says.

The government plans to sell up to 49% of MRP, Genesis Energy, Meridian Energy and Solid Energy, as well as selling down its three-quarter stake in Air New Zealand to no less than 51%, in a bid to raise NZ$5-7 billion to pay for new capital spending over the next five Budgets.

Mighty River Power is being readied for the first initial public offering (IPO), with shares going on sale sometime in the third quarter this year. Either Genesis or Meridian are likely to come second (and third), while Solid Energy is tipped to be the fourth of the energy companies to have a partial stake sold off to private investors.

The government must keep in mind that there is a series of partial floats planned, and therefore needs to conduct the share allocation process for MRP in a way that "maintains interest across a number of bidders," English told Parliament's Finance and Expenditure select committee on Wednesday morning.

The government has said it wants 85-90% of the companies to be New Zealand-owned, including its own 51% stakes. That means 20-30% of the shares sold to private investors may be sold to foreign interests.

The government has said it would like to see widespread New Zealand ownership of the companies.

There is interest in the companies from Iwi, KiwiSaver funds and 'mum and dad' investors, as well as foreign investors.

The government is considering investor loyalty bonuses for New Zealanders who are issued shares, although English said to the FEC today that the government was "not going to try and control the market," once shares had been sold off.

'Don't read too much into it'

Asked whether that indicated the government was leaning away from loyalty schemes, a spokesman for English said detailed decisions on that matter had yet been made. A Treasury official told interest.co.nz there were too many people jumping to conclusions when there was still a large amount of work still to be done.

No large capital demands

Meanwhile, English said, having looked through the companies set for partial privatisation, there "aren't really any requirements for large capital demands in the foreseesable future".

He was facing questions of what would happen if the companies needed more capital and the government had to take part in a capital raising, as it was legislated to own at least 51% of the companies.