Fund managers say the terms of the Mighty River Power offer are mostly on target with market expectations.
Shane Solly at Mint Asset Management said the price range of $2.35 to $2.80 a share for the partial privatisation showed the issue had strong support in the broader market.
Matt Goodson, portfolio manager at BT Asset Management, said the market was still digesting the offer details but it appeared the price range, size, and conditions of the issue were all in line with expectations. He said potential yields for Mighty River "looked acceptable".
"One encouraging element is that there is a clear recognition that New Zealand bids will have some degree of allocation preference in the process.
"That has been clearly stated, which is quite encouraging, given the degree of interest and the savings pool arising from the rise in KiwiSaver funds," he said.
The Government plans to partially privatise up to 49 per cent of Mighty River Power. When the stock lists on the NZX on May 10, it is expected to have a market capitalisation of between $3.29 billion and $3.92 billion, making it the exchange's fourth or fifth largest company.
New Zealand retail investors in the offer will receive one loyalty bonus share for every 25 shares they hold for two years from the offer, up to a maximum of 200 bonus shares.
The final price is expected to be announced on May 8 after the retail offer has closed and the institutional offer has been conducted by an auction-style "book-build" process.
The offer documents highlight several risks involved in the investment, including the possible closure of the Tiwai Pt aluminium smelter.
Solly at Mint Asset Management said the Tiwai factor was "a key element and one that is hard to ignore".
Finance Minister Bill English said the bonus was another way to encourage widespread and substantial Kiwi ownership of shares in Mighty River.
"It also recognises the loyalty of those New Zealanders who retain their shares and contribute towards the country's savings culture."
The loyalty bonus scheme is available only to Kiwi retail investors - not to institutions in NZ or overseas. English said the Government expected to see at least 85 per cent Kiwi ownership of the company at the time it lists.
The maximum cost of the loyalty scheme will not be known until the offer has closed and allocation decisions are made, but a bonus offer of one share for 25 meant the maximum cost would be 4 per cent of the value of shares allocated to New Zealand retail investors, he said.
The share offer period, during which Kiwis can apply to buy shares, is expected to open on April 15. It will stay open for three weeks, with the likely closing on Friday, May 3, one week before the company lists.
Mighty River is one of New Zealand's largest electricity companies. Its generating assets mostly comprise a series of hydro dams on the Waikato River. It also has extensive geothermal assets.
It will be the Government's first partial privatisation under the so-called mixed ownership model. It also intends to partially privatise generators Genesis and Meridian.
State-owned coal company Solid Energy has been taken off the list after hitting financial difficulties.
The Government also expects to sell down its majority stake in Air New Zealand. The share offer programme is expected to raise between $5 billion and $7 billion of capital.
I haven't pre-registered, can I still buy shares?
Yes, but those who have will get 25 per cent more shares if the offer is oversubscribed and subject to scaling.
Why offer loyalty bonus shares?
Bonus shares will provide NZ retail investors (sometimes referred to as "mum and dad" shareholders) who satisfy the criteria with free shares after two years. It provides an incentive for New Zealand retail investors not to sell their shares within the first two years of issue.
Are there any fees regarding Loyalty Bonus Shares?
How do I know how many shares I can apply for if I don't know the price per share?
You apply for a dollar value of shares, for example, $2000 of shares. You do not apply for a number of shares. The minimum application size is $1000 and multiples of $100 thereafter.
Will I get a refund if I don't receive all the shares I applied for?
Yes. If you don't receive all of the shares you ask for, you will get a refund of the balance payment without interest, within five business days after the allotment date. The final price per share is determined when the demand from retail investors is assessed along with the demand from institutional investors during the bookbuild process.
What is the bookbuild?
A bookbuild is the process of collating demand for shares from retail investors and demand for shares at various prices from institutional investors who bid for shares. The information collated in this process is then used to assist with setting the final price.
Will retail investors pay more than institutional investors?
No. All successful applicants will pay the final price per share. Retail investors also receive extra incentives to institutional investors, such as the guaranteed allocation and loyalty bonus shares.
When will investors know how many shares they have been allocated?
Allocations are expected to be available from May 10. Investors who applied on the website can go online from that date and check their allocation using their unique reference number. Investors who did not apply online will be able to confirm their allocation by calling 0800 90 30 90. Confirmation in writing should be sent on May 14.
How many shares will I get for my guaranteed $2000?
Your share allocation will depend on the final price per share. Based on the indicative price per share, a person would get between 714 and 851 shares for a $2000 application. They would also receive between 28 and 34 additional free loyalty shares if they hold their shares for 24 months. So they would get between 742 and 885 shares, after two years.
Will broker clients get higher allocations than investors who don't have a broker relationship?
Are there limitations when it comes to foreign ownership?
Yes. The Government says its goal is to ensure that a minimum of 85-90 per cent of Mighty River Power's total shares are owned by Kiwis. The Government has also introduced legislation which prevents any one shareholder (other than the Government) owning more than 10 per cent of Mighty River Power.
The FMA is reviewing the share offer document during the next week. What is it looking for?
It is looking for any material inaccuracies.