Mighty River 'in great shape' for partial sell-off

Joan Withers (above) says Mighty River Power has outperformed its listed peers, Contact Energy and TrustPower, over the past four years. Photo / Dean Purcell

Mighty River Power's leaders say the company is in good shape for partial privatisation if a re-elected National Party-led government goes ahead with a part sell-off of minority stakes in some state-owned enterprises.

At the company's annual public meeting yesterday chairwoman Joan Withers and chief executive Doug Heffernan highlighted strong compound returns over the past four years and a good earnings forecast.

The message was aimed as much at the bankers, analysts and potential investors as customers worried about generation methods and power prices among the audience of about 70 in central Auckland.

Mighty River could be the first of three power companies to be 49 per cent sold some time after the election and Withers told the meeting the company was looking forward to 2012 with confidence.

"We're in great shape and ready to rise to the many opportunities."

Speaking afterwards she said the company could benefit from partial privatisation.

"Obviously everything is dependent on the outcome of the election and whatever government is formed. There's no fear or apprehension," she said.

"I think people can see the opportunities for the company that it presents so if that's the decision of the government then we can see it can have benefits for the company."

Deutsche Bank and Craigs Investment Partners have been commissioned by the Treasury to provide a scoping study on the proposal on the partial sale of MRP, Meridian Energy, Genesis Energy, Solid Energy and a greater stake of Air New Zealand. The work will end before next month's election but any sale timetable is uncertain.

Withers said Mighty River had a long-standing relationship with the investment community because it was compared with its listed peers, Contact Energy and TrustPower.

She said that over the past four years MRP's financial performance had been better.

Heffernan said the experience of other asset sales and reform meant the transition to a partial NZX listing would not be such a big leap. "We think we're in pretty good shape.

"There'll be some additional things - investor relations - that we'll have to think about and up our game on but things like today [the meeting] are part of that journey to get match fit."

Craigs Investment Partners analyst Grant Swanepoel said given its leadership, balance of assets and profitability, Mighty River was well positioned if partial privatisation went ahead.

"I think the general opinion is that of any of the SOEs, Mighty River is in the best position," said Swanepoel.

He said Withers and Heffernan made up a "formidable" leadership team.

Mighty River, through Mercury Energy, has about 20 per cent of the retail market and generates just under 20 per cent of the country's power.

Withers said the company had invested $1 billion in geothermal generation during the past decade and this had allowed it to grow faster than any other in the sector.

Earnings before interest, taxation, depreciation, amortisation and financial instruments for the year to June 30 were $443 million and its guidance for the current year was between $430 million and $450 million.