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Opposition blamed for low take-up of Mighty River shares

Published: 5:51AM Thursday May 09, 2013 Source: ONE News

Finance Minister Bill English is confident investors "scared off" buying shares in Mighty River Power by the Opposition's new energy policy will be keen to get a piece of the next asset on the block.

More than 113,000 New Zealanders will become shareholders in the company following the share offer - but that is just a quarter of those who
pre-registered.

And Labour-Green's policy of state control over power prices is being blamed for the low take-up.

Labour and the Greens jointly announced a few weeks ago that if they gain power they would reform the power industry by creating a single body to purchase electricity which would then be on-sold to competing retailers.

"I'd say [the announcement] certainly knocked about 100,000, if not more out of investing in the company," financial commentator Brian Gaynor told ONE News today.

But Labour Leader David Shearer maintained today that revealing the energy policy "was the responsible thing".

"After that it's up to the market. I don't think Bill English has a clue of what he could have got," Shearer said.

State Owned Enterprises Minister Tony Ryall said that some New Zealanders were intending to take part in the IPO "and were scared off by the opposition's interference".

Another opportunity

The Government is now banking on a better result from the next asset to go up for sale in August, which is either Genesis or Meridian Energy.

"They've got another opportunity, there is growing scepticism that Labour and Greens could not implement a policy even if they won an election," English said today.

Details of the next partial asset sale will be revealed in next week's Budget announcement.

Some 86.5% of the shares will be New Zealand owned: 26.9% by New Zealand retail investors and 8.6% by New Zealand institutions, while the Government retains a 51% holding.

That leaves 13.5% for overseas institutions.

ONE News Political Editor Corin Dann says that crucial to the success of the next float will be whether the $2.50 price on Mighty River shares increases after tomorrow's listing.

The Government is hoping that if shares do rise, it will reassure "turned-off" investors that their fears about the Opposition's pricing policy were overblown, Dann said.

Shares in the state-controlled electricity generator and retailer will list on the NZX at 12.30pm tomorrow at $2.50 a share.

Based on that price, the cash yield is 5.2%, said Harbour Asset Management's Andrew Bascand.

While Gaynor said he expects the shares to trade "around $2.60 to $2.70 when it opens".

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