Mighty River $2.50 price hit by power policy

The Government had set an indicative price range of $2.35 to $2.80 and Mr English said that the price would be set at $2.70 to $2.80. Photo / Sarah Ivey

Mighty River Power shares will cost $2.50 each, a price the Government says was hit by Labour and the Green's announcement of a controversial power policy.

Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall revealed the price last night, after a "bookbuild" process yesterday, when large investors submitted bids for the shares.

English confirmed the Government believed the Labour-Greens announcement of a single buyer model for wholesale electricity they claimed would reduce electricity prices for consumers had an effect on the price for shares.

The Government had set an indicative price range of $2.35 to $2.80 and English said early indications before the Labour-Greens policy was announced was that the price would be set at $2.70 to $2.80.

Allowing for 10 million shares that have been set aside for a loyalty bonus share scheme, the sale of 676 million Mighty River shares will net the Government $1.7 billion - about $200 million less than what it would have received if the higher price had been achieved.

Ryall said Labour and the Greens "certainly did their best to damage the offer" with their announcement. "We can't know for sure but we can surmise that some New Zealanders were intending to take part in the IPO and were scared off by the Opposition's interference and so, unfortunately, they'll have missed out on being part of this opportunity and eligibility for the loyalty bonus shares."

English said 113,000 individual New Zealanders bought shares in the offer, with an average purchase of $8220 worth of shares.

That represents a fairly modest ratio of the 440,000 New Zealanders who pre registered to buy shares and is only half of the number of individuals who bought shares in the 1999 Contact Energy float.

English said: "Probably the most disappointing aspect" of the Labour -Greens announcement was "it prevented a whole lot of first-time New Zealanders from taking up their first share investment".

However, English said that as the offer progressed investors appeared to become more sceptical about the policy being put in place even if the Opposition were elected.

The Government's expectation was the effect would lessen for the subsequent sale of Meridian Energy and Genesis Power.

Labour Leader David Shearer said the Labour-Green policy was only one of a number of factors - including uncertainty over the future of the Tiwai Point smelter - that would have had an effect on the share price.

Shearer said the 113,000 individuals who bought shares represented just 2.5 per cent of all New Zealanders, "and 97.5 per cent of New Zealanders have missed out".

Greens co-leader Russel Norman said more than twice as many Kiwis had signed the Keep Our Assets petition than had bought the shares.