Govt fires up Mighty River sale

including the Government's majority stake, it was expected up to 90 per cent of shares in state-owned enterprises would be held by New Zealanders. Photo / Supplied

Listing process could start as early as next week after Supreme Court ruling clears last legal hurdle.

Finance Minister Bill English says the Government could kick off the Mighty River Power listing process as early as next week.

And he told capital market players yesterday morning that including the Government's majority stake, it was expected up to 90 per cent of shares in state-owned enterprises would be held by New Zealanders.

Mighty River Power said it welcomed the removal of uncertainty around the partial sales process but was still waiting for "advice and clarity" from the Government on the listing timetable. Market experts said while the company would be attractive to investors, some uncertainty remained about long-term electricity demand and possible fish-hooks in the Supreme Court ruling.

The court yesterday dismissed attempts by Maori claimants to settle Treaty of Waitangi claims to freshwater rights before the sell-off, clearing the last legal hurdle for selling up to 49 per cent of the state-owned electricity company.

However, it rejected the findings last year in the High Court that the Cabinet decision to sell a stake in MRP could not be judicially reviewed.

A Mighty River spokeswoman said the company was ready to respond immediately to Government decisions on the timetable.

"From our perspective, this is part of a process that began back in January 2011 and we're not about to speculate on what this means in terms of next steps - we can be patient for a few more days," she said.

One market source said that once the details were announced there was likely to be a period of pre-registration during which the Government would gauge the level of interest.

Rickey Ward, head of equities at Tyndall Investment Management, said the court decision cleared the way for the listing to go ahead in either April or May. But he said there was still the unresolved issue of the Tiwai Point smelter.

Rio Tinto is the country's single biggest user of electricity and is in discussions over whether to keep its business in Bluff.

If the smelter was closed it would hit all the power companies as usage would drop across the sector.

"This just alleviates some of the concerns. But the actual industry dynamics still need to be clarified," Ward said.

Solid Energy's current woes also weighed in favour of Mighty River Power's listing, he said. A partial listing would spread the risk to more shareholders while bringing better governance to the company.

Hamilton Hindin Greene analyst James Smalley said MRP was a solid utility company that could offer gross yields of around 7.5 per cent based on what its already listed peers - Contact Energy and TrustPower - paid shareholders.

"They make pretty good money year in and year out and you're looking at income over growth."

Investors needed to be mindful of the possibility of further legal action and although MRP was less vulnerable to being hit by dry years because of its diverse generation, it still had some exposure if water through its Waikato River dams was restricted as was the case now in the extremely dry summer.

Milford Asset Management senior analyst William Curtayne said of all the SOEs investors were most comfortable with Mighty River which was "superbly run and well managed".