Napier Port's share float has been given the final green light. Photo / Hawke's Bay Today
Napier Port's share float has been given the final green light. Photo / Hawke's Bay Today
Napier Port chief executive Todd Dawson says the company's upcoming share offer will mean it can deal with its congestion problem by building a new container wharf.
The port's current owner, the Hawke's Bay Regional Council, this week gave its final approval for the port to proceed with a 45per cent initial public offer (IPO) of shares next month, followed by an NZX listing in August.
The new wharf, which is estimated to cost between $170 million-$190m, is expected to be completed by 2022.
Dawson, who was appointed chief executive in 2017 from Kotahi logistics, said a new wharf was the port's immediate focus.
"The new wharf is really needed because of the congestion issue that the port is facing," Dawson told the Herald.
"We face running out of available berths to handle all the vessels arriving at the port, and on top of that vessels are also getting bigger," he said.
"The combination of the number of vessels coming and the size of vessels means we need to expand to be able to get cargo through the port efficiently."
Napier is the country's fourth biggest container port.
In terms of exports, it's big in the log trade and in horticulture. On the imports side, there is fertiliser, oil and cement.
Dawson said the port is also increasingly popular destination for cruise ships.
He said New Zealand's port sector faced imbalances in the way it deals with exports and imports.
Napier Port chief executive Todd Dawson. Photo / File
At Ports of Auckland, imports heavily outweigh exports, meaning a lot of empty containers need to be transhipped to other parts of New Zealand to be filled with exports.
The Port of Napier has the opposite problem - 80 per cent of its trade is exports and 20 per cent imports.
"Those containers that need to get emptied at Auckland need to be redistributed at a cost to the shipping lines throughout the country," he said.
"There is definitely opportunity for New Zealand to look at lowering the overall cost and resolving that problem by looking at rebalancing the network that is already in place," he said.
Full disclosure documents are due out on July 15 but the port has released details about how locals can buy shares.
Hawke's Bay residents will be guaranteed a minimum $2000 allocation of shares in the offer.
Residents and non-resident ratepayers, as well as port employees and certain iwi entities, will be given priority entitlements or preferential allocations to enable strong local ownership.
The Australian Financial Review (AFR) reported that Napier Port had been using a "yield and growth" pitch to Australian fund managers in what would be a $200m-plus equity raising and $500m float.
Quoting from a Goldman Sachs pre-deal report, it said the port would seek to pay 70 to 90 per cent of its free cash flow as dividends, fully imputed for New Zealand residents.
The 2020 financial year should bring dividends worth $15.8m for investors, the Goldman Sachs' report said, which would represent close to 70 per cent of free cash flow.
Napier Port expects to pay a $54m dividend to the council for the 2019 financial year, the paper said.
That includes a $10m ordinary dividend and a $44m special dividend - more than seven times the $7.2m profit the port expects for the year to September 30, AFR said.
