Strong interest in SOE floats

The dam at the northern end of Lake Karapiro in the Waikato Photo / NZ Herald

There is strong interest from the investing public in the partial floats of state-owned enterprises, but take-up of each individual company will depend on pricing, say brokers and bankers.

Hamilton Hindin Greene director Grant Williamson said: "We've had a rather large number of investors show interest, including new investors that maybe haven't been in the market for some time."

Williamson said it was hard to gauge the specific interest in Mighty River Power as it depended on the pricing details which have yet to be revealed.

"There was certainly a lot of interest in Contact when it was floated in 1999. It is going to come down to price as to what sort of demand there will be."

Shane Edmond, head of private client services for Forsyth Barr, said investors were also waiting to see what the timing would be for the Mighty River Power float.

"The Government continues to say it will be the third quarter, but given that is three months long it's hard to know if it will be early or late.

"General market conditions have been reasonable and issues like Trade Me have given some confidence to investors.

"In general, the interest is there, but there is still a lot of detail to come out before people can make a decision on which assets they will invest in."

One market player believed Mighty River Power would have to reach a balance between keeping enough of its profits to enable it to grow and attracting retail investors, many of whom are keen on strong dividend pay-outs.

Debate has surfaced in the market about how much of Mighty River Power will be floated.

The Government has said it will retain at least a majority stake in all of the SOEs it floats but it could choose to sell less than 49 per cent.

The Government will have to weigh up whether it wants more money now by selling as much as it can, or keeping a larger stake and potentially earning more through the growth of the company.

Regardless of how much it sells market players said the Government would want the first one out of the blocks to be seen as successful to set the tone for the other floats. Tamsyn Parker