Market analysts have welcomed the possibility that Port of Tauranga’s biggest shareholder may sell part of its 54 per cent stake, saying it has positives for investors.
The Bay of Plenty Regional Council has announced it has begun a process to consider a staged selldown of its 54.1 per cent stake in the NZX-listed port, valued at around $2 billion.
The council said it would retain a minimum shareholding of 28 per cent, managed through its investment arm Quayside Holdings.
Port of Tauranga is New Zealand’s biggest and busiest port and the country’s main export gateway.
Craigs Investment Partners senior research analyst Mohandeep Singh said while Quayside had been a stable shareholder for the port, its large stake also made the company “relatively illiquid”.
Capital market participants would get greater access to a quality infrastructure asset, he said.
Harbour Asset Management director, portfolio manager Shane Solly said: “It would be great to see some increased liquidity in Port of Tauranga shares”.
“There is a reasonable investor appetite for well-structured infrastructure shares.”
Craig’s Singh said Port of Tauranga’s weighted rating on the NZX 50 could also rise with the potential selldown because the current 54 per cent stake gave it a lower rating on the free float index.
“It’s less of an issue but you could argue from a theoretical point of view that there’d be better price discovery if there were more trades on the open market,” Singh said.
As the market had seen with the sale of Auckland Airport shares by the Auckland Council, there was demand for quality infrastructure assets “regardless of what the market is doing more widely”.
Singh believed that for the council to say any decision to divest part of its shareholding would be part of the council’s draft long-term plan and subject to community consultation early next year, the announcement was more than simply a normal review of its Quayside assets.
“At face value, it’s an entirely sensible and prudent consideration from Quayside to say ‘we have quite a large portion in one asset and should be thinking about diversification’.”
Singh did not believe any shareholding selldown by the council would affect the operation of the port.
“At 28 per cent, they’d still be an influential shareholder.”
Demand for offloaded shares would depend on several factors including the structure of the selldown, the pricing and the timing.
“It’s very early stages so who knows what is going to happen but they are the most efficient port in the country with a highly regarded management team.”
Singh said the local authority had been the largest shareholder in the port for more than 30 years.
In 1989 it owned 77 per cent of the port, dropping to 55 per cent when the port was listed in 1992.
It retained 55 per cent until 2015 when the stake was sold down to 54.1 per cent.
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.