Air NZ asset sale tipped for next week

The Govt may sell down its stake in Air NZ early next week.

The Government is being tipped to sell down its stake in Air New Zealand early next week ahead of a referendum asking Kiwis if they support partial sales of state-owned assets.

The Government owns 73 per cent of the national carrier and has said it wants to reduce its stake to 51 per cent, but has yet to name a timeframe.

Several market sources spoken to today said there was an expectation that the deal would be done before a referendum asking Kiwis if they support the Government selling up to 49 per cent of Meridian Energy, Mighty River Power, Genesis Power, Solid Energy and Air New Zealand.

Postal voting for the non-binding referendum opens on Friday November 22 and closes on December 13. "The smart money is on something to kick off early next week," said one market source.

Another market player told the Herald that he had heard it could happen before the weekend.

The decision to sell is backed up by Air New Zealand's strong performance on the share market.

Its shares have had a good run in the last year rising 34 per cent.

Today they closed up 1c on $1.67 valuing the company at $1.833 billion.

At that share price the sell-down stake would be worth around $400 million.

Market players have said the shares would be snapped up because of strong appetite for the company.

The sale is expected to be done in the form of a block trade where one or more investment banks would buy up the stake and then on-sell it to others in an off market deal.

Those type of deals are typically not announced to the share market until after they have been completed.

New Zealand institutional investors and brokers are expected to be at the front of the queue for the shares because of the Government's promise to ensure at least 85 per cent of the assets are sold to New Zealanders.

Sources said the Crown had yet to appoint a company to manage the sales process.
Investment banks typically get up to two weeks to put together a pitch for selling an asset but that could be reduced to as little as two hours for Air New Zealand.

Government departments must follow a tender process but a source said that could overcome by the Government picking a company from its pre-selected panel.

That panel includes Goldman Sachs, Macquarie, First NZ Capital, Deutsche Bank, UBS, Craigs Investment Partners and Forsyth Barr.