Hawke's Bay residents given $2k share allocation in Napier Port

Napier Port is New Zealand's fourth biggst port. Photo / Supplied.

Hawke's Bay residents will be guaranteed a minimum $2000 allocation of shares in the planned Napier Port initial public offer (IPO), the port said.

Under the proposed terms of 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, it said.

The port's current owner, the Hawke's Bay Regional Council, this week gave final approval for Napier Port to proceed with a 45 per cent IPO of shares.

Employees have been guaranteed a minimum allocation of $5,000 worth of shares.

Port chairman Alasdair MacLeod said the company had been working hard to ready itself for the IPO.

"Like the regional council, we believe strong local participation in the Port IPO is desirable," he said in a statement.

The port is in the final stages of preparation for the offer and was targeting the launch of the IPO on July 15, with a listing on the NZX expected in August.

The port said full details will be disclosed in a product disclosure statement (PDS), which will set out all the material information potential investors need about applying for port shares, which will be published when the offer is launched next month.

Napier Port is New Zealand's fourth largest port by container volume.

The Australian Financial Review (AFR) reported that Napier Port had been using a "yield and growth" pitch to Australian fund manages in what would be a $200m-plus equity raising and $500m float.

The AFR, quoting from a Goldman Sachs detailed pre-deal report, 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 $15.8 million 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 $54 million dividend to the council for the 2019 financial year, the paper said.

That includes a $10 million ordinary dividend and a $44 million special dividend - more than seven times the $7.2 million profit the port expects for the year to September 30, it said.