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Kiwis queueing for SOE shares - analyst

Published: 11:46AM Monday April 16, 2012 Source: ONE News

A leading investment firm says it is fielding a lot of interest from the public in buying shares in partially privatised energy companies, despite polls showing the majority of New Zealanders are politically opposed to the sale of state owned assets.

A ONE News Colmar Brunton poll taken at the beginning of April shows that selling state-owned-enterprises (SOEs) continues to fly in the face of public opinion, with only 30% of people saying they support the mixed-ownership model.

Over 60% or double the number of "pro" voters said they did not support it while the remaining 9% did not know.

But Mark Lister from Craigs Investment Partners told TV ONE's Breakfast that politics aside, there is a strong level of interest by Kiwis buying for their own shares and it is continuing to build.

He said he travels the country frequently talking to people about being shares in the floated companies, and the reception has been positive.

"There are a lot of people turning up to presentations, asking questions, those sorts of things. So I think there is definitely a strong level of interest."

The interest is coming from current investors and people entirely new to shares, said the analyst.

Change shareholding

Despite reports of a loophole within the law allowing the Government to sell more than 49% of the value of the companies to be sold, Lister said this scenario is not likely.

"I mean it could do something like that technically, but it wouldn't make a lot of sense, and I don't think there's much likelihood of that," he said.

"You don't see that in any companies in the New Zealand market, and it's something that any of them could do."

Lister said there is not "a lot of credibility" in the strategy.

Mighty results

Lister said Mighty River Power, the first state-owned enterprise up for sale, had reported "great" results.

"Earnings were up 14%, the dividend was up about 16%, and they raised their full year earnings guidance up by about 6%, so that's good - whether it's a listed company or not," he said.

Weather was on the company's side, with rain falling in the right part of the country, he said.

"It was also dry in the right parts of the country to give them the right sort of pricing generation mix, so they are coming into this on the back of a good result", he said.

Next year's results could be more subdued or even flat in comparison to this year, said Lister.

He said there is no reason to believe the Government will not go ahead with the proposed date of later this year to start selling off the assets, with Craigs expecting the September timeframe is the likely time Mighty River Power will come to market.

Iwi, water, and risk

Lister told Breakfast barriers to the sale of state owned assets such as Section 9 issues with the Treaty of Waitangi, and issues with Maori rights to water, would not make the investment more risky than usual investments.

Section 9 states nothing can allow the Crown to act in a way that is inconsistent with the Treaty of Waitangi regarding state assets.

"Any investment has things you need to look at, potential risks. Section 9 is largely dealt to, it's been replicated in the legislation and it only applies to the Crown," he said.

Prime Minister John Key said at the end of February he arrived at a solution to protect Maori rights while partially privatising state assets, after the Maori Party threatened to break its coalition deal with National after it found out the party could take out protections in Section 9 of the State Owned Enterprises Act.

Lister said the Maori water rights issue has heightened the risk of investment.

"It will absolutely be something that people will have to follow closely," he said.

At the end of March the Waitangi Tribunal granted urgency to a hearing which looked into the extent of Maori treaty rights over water.