Auckland Council has sold its shares in Auckland International Airport.
One of Rocket Lab’s earliest offshore backers sold a major block of shares during their firm’s recent run-up.
Silicon Valley-based investor and Rocket Lab director Matt Ocko realised US$96.8 million ($169.5m) selling 5.4m shares during November at between US$17.73 and US$18.21 per share, according to SEC filings.
The sale left him with 5.7m shares in the Kiwi-American company, held through his venture capital firm DCVC (Data Collective Venture Capital) and other entities.
It was the largest insider sale since founder and CEO Peter Beck Beck sold down his stake from 11.3% to 10.5% of the firm in September last year.
The transaction netted Beck US$20.23m. Beck said the funds would go towards estate planning and capitalising a philanthropic foundation.
Ocko first invested in Rocket Lab in a 2018 Series E round that valued the then privately-held firm at just over US$1b.
Rocket Lab’s Nasdaq-listed shares have climbed from US$4.58 at the start of August to a recent US$23.11 for a US11.6b market cap - making Beck a billionaire twice over in the process.
Investors have cheered news that the company’s much larger, crew-capable Neutron is on track for a 2025 launch, with its first commercial contract for the new rocket (to an un-named satellite constellation player) already in the bag.
Ocko - a regular visitor to NZ through his conservation interests - is a long-time investment committee member for our Government’s NZ Growth Capital Partners Elevate fund. His firm is also a major investor in Deloitte Fast 50 chart-topper Halter.
Stakes in the now US-registered, privately-held smart cow collar maker are not revealed, but Ocko’s DCVC led an $85m Series C round in March 2023.
The sale of Auckland Council’s remaining shares in Auckland International Airport (AIA) removes a stock overhang for the sharemarket.
The writing was on the wall for the council’s take when it opted – in the depths of the Covid pandemic – to not take up its rights when the airport undertook a $1.2 billion capital raise in 2020.
Last year, the council sold a 7% stake in the company at an average price of $8.11 per share.
This week, the council sold its remaining stake for around $1.31b, through UBS.
The council’s 9.71% holding in the airport was sold for “at least” $8.08 per share – its last traded price at the time.
Craigs Investment Partners investment director Mark Lister said the sale closed the loop on whether or not the council would go through with a sale.
“With those shares having gone far and wide, it might bump up the free float for the company’s shares and increase its index weighting.
“It’s also a vote of confidence that it was so well-supported,” he said.
The transaction caused some weakness in the broader market as investors lightened their portfolios to take on more AIA shares.
“But that weakness in the broader market will blow over quite quickly,” Lister said.
“Other councils around the country would be wise to consider what has happened here, and to consider their own options.”
The increasing proportion of New Zealand investment funds using a passive index benchmark replication approach to investing means index weight changes can have a short-term impact on company share prices, Harbour Asset Management portfolio manager Shane Solly says.
Auckland Council’s sale of Auckland Airport increases the company’s free float, making more funds available for investment, he said.
As a result, AIA’s weight in the benchmark S&P/NZX 50 index increases by approximately 0.9% to about 10.2%, with the weights of all other companies on the index falling.
In Australia, it is possible dual-listed Fletcher Building and Spark NZ will be removed from the S&P/ASX 200 index later this month, Solly says.
The ASX200 is the most commonly followed by Australian investment funds. The expectation of these changes may already be weighing on both share prices.
“Passive index replication funds don’t get a choice – they have to buy or sell shares to replicate benchmark weight changes.”
In the US, passive investing represents approximately up to 50% of the investors in some benchmark sharemarket indicess, while there’s a lower proportion of passive investing in New Zealand and Australia, less than 50%.
“Index weight changes lead to near-term volatility, but ultimately it’s a company’s underlying business that drives long-run returns,” Solly says.
Meanwhile, passenger recovery at the airport has temporarily stalled, Forsyth Barr said in a report.
“This is not news, but the recovery out of the stall is likely to be slower and longer than we previously thought,” the broker said.
There were several drivers.
“First, Air New Zealand, AIA’s biggest customer, is challenged by engine maintenance issues, which is impacting aircraft availability for both domestic and international services.
“Second, Air NZ is not the only airline impacted by maintenance and parts issues.
“Third, softer inbound tourism demand, with the recovery in inbound visitors lagging that of outbound Kiwis.”
Following Air NZ’s investor day last week, Forsyth Barr lowered its passenger growth assumptions for AIA over the near to medium term.
“We believe consensus expectations need to follow.”
UBS could be in for another bumper financial year, securing the sale of the second tranche of the airport shares.
In the 2023 year, UBS reported a net profit of $10.10 million, up from $0.83m a year earlier.
Fee and non-interest rate revenue came to $47.2m, up from $32.4m a year earlier.
A large chunk of this would have come from the first airport sale, which was also done through UBS, in 2023.
Property valuations of the listed property stocks looked to have stabilised, going by the reports last month.
Salt Funds managing director Matt Goodson said New Zealand had seen a couple of years of expanding capitalisation rates more than offsetting rent increases and driving valuations lower.
However, he says cap rates and thus net tangible assets have now largely stabilised.
“Gearing levels are generally a little bit higher than are comfortable so I suspect a few asset sales will be desirable,” he said.
“The next step for a recovering market will be a few transactions that validate current valuations.”
Forsyth Barr, in its report on the November earnings season, said actual earnings per share growth was below expectations and “misses” outweighed “beats”.
“Downgrades have continued, with cuts made across the board to both 2025 and 2026 estimates.
“The post-result price reaction, measured as the absolute price reaction versus the market, finished balanced.
“However, there were a number of very large price swings on post-result day. Encouragingly, there were a number of ‘slightly positive change in’ outlook statements made.”
Gentrack’s share price has continued to march higher.
The stock now trades at around $14.00 from just $2.50 two years ago.
The company, which specialises in providing software for utilities, last month reported a 25.5% lift in annual revenue but a slight decline in net profit to $9.5m from $10m.
In the utilities business, total revenue grew by 23% to $181.3m.
Jarden said a lack of full-year 2025 guidance opened uncertainty to market expectations, albeit with medium-term targets reiterated.
“Gentrack has indicated it expects revenue growth across both businesses in 2025 but stopped short of giving any quantification at this stage given uncertainty around contract timings, suggesting some comfort with where market 2025 consensus had been sitting ahead of the result ($237m).”
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
- additional reporting Chris Keall
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