Bullish debut expected for Vector

The biggest local share float in six years is all but complete, with just under $600 million of new Vector shares due to debut on the stock exchange on Monday morning.

Some 50,000 new shareholders will find out within the next few days how many of the sought-after shares they will have been allocated.

Signs of their attractiveness to the market continued yesterday, with investors snapping up NGC shares, and their price increasing by 10c each, finishing the day at $3.85. Anyone buying the few remaining NGC shares is guaranteed the same payout as those shareholders who accepted the Vector cash and shares takeover offer, which closed on Wednesday.

Vector is paying only $3.40 for NGC shares, but the most attractive part of this deal is that $2.62 of the price is being paid out in new Vector shares. The expected jump in the Vector share price is why investors were willing to pay 45c more for each NGC share yesterday.

Of the $592 million raised in the initial public offering (IPO), $380 million is going to NGC shareholders, $140 million to Vector capital bondholders and $72 million to Auckland Energy Consumer Trust (AECT) beneficiaries.

While announcing the $3146 allocation yesterday, the company warned of the risk of trying to sell any shares until it is known exactly how many each shareholder has been allotted.

Auckland-based fund manager Brook Asset Management says it expects to be the biggest new shareholder in Vector after the float.

Stock exchange chief executive Mark Weldon this week welcomed the entry of Vector to the share market and said he hoped the experience of many first-time investors would be a good one.

"We think it will attract a lot of analysts' attention, a lot of attention from offshore."

Weldon said he had heard of a substantial appetite for the shares from AECT income beneficiaries. "You like to see people take up those opportunities, and you like to see them have implicit faith in putting their money into capital assets."

The $592 million raised from the share float is being used to pay off debt incurred when Vector bought 66 per cent of gas wholesaling and transmission company NGC. With a much larger, integrated company, Vector says it expects dividends to its income beneficiaries to double.

VECTOR FLOAT

The details:

Holding statements will be sent to new Vector shareholders early next week.

Refund cheques are due to be posted out on Wednesday.

Any shareholder can ring Computershare on (09) 4888-777 from Monday to find out how many shares they have been allocated.

Vector shares will start trading on Monday morning at 11am.

The listing price is $2.38 each.

Money raised in the IPO is being used to pay for the takeover of NGC.

The recent price of NGC shares points to a healthy premium for new Vector shares.

Anyone who did not pre-register for the beneficiary entitlement, but sent in an application anyway, will not get any shares.

Income beneficiaries will be issued with no more than $3146 worth of new shares.

All Vector capital bondholders are receiving their full allocation.