Mighty River will be first to float, sources say

Stakes in Mighty River Power will be sold to private investors. Photo / APN

National's re-election has put the the sale of state assets in the market spotlight and sources say they expect Mighty River Power to be the first "cab off the rank", probably in the second quarter of 2012.

Mighty River Power is seen as being the most logical of the big power companies to float first because it is the best prepared in terms of financial structure and corporate governance.

The National Party's strong showing in the polls represented an endorsement of the Government's stewardship of the economy, financial market sources said yesterday, but many stopped short of calling it a ringing endorsement of its plan to partially privatise some state assets.

Prime Minister John Key campaigned on a so-called "mixed ownership model" that would see minority stakes in power generators Mighty River Power, Genesis, Meridian and coal company Solid Energy sold to private investors.

The Government also plans to sell down its 75 per cent stake in Air New Zealand.

National's campaign manager Steven Joyce said yesterday that the party was not taking anything for granted, despite it winning the lion's share of the party vote.

Key will meet with Act, United Future and the Maori Party today. Act favours the asset sales programme, United Future has said it would not oppose it, but the Maori Party is against it.

Bernard Doyle, chief investment officer at wealth management company JB Were, said Saturday's's result was not a ringing endorsement of the asset sales programme, but that it would be up to the Government to show that it would generate genuine positives for the country.

"Clearly they know that the mandate for asset sales was very thin," Doyle said.

He said previous state asset sales had been carried out "hurriedly and poorly".

Goldman Sachs New Zealand chief executive Andrew Barclay said the election showed that people had voted for "a steady hand on the till" in a time of widespread economic uncertainty.

He declined to comment further because Goldman is one of a handful of investment banks working with the Treasury on the Government's mixed ownership plan.

One financial markets source, who did not want to be named, said he thought National had lost support due to its asset sales plan.

"Some people would say that it's a mandate for asset sales, and I just don't see how you can read that in," he said.

"I don't see how you can make that argument at all, and in fact the opinion polls tell you quite the opposite."

But ANZ chief economist Cameron Bagrie said the electorate had delivered a clear mandate. "We either sell down some of those assets, we don't re-invest in healthcare and education or we borrow more money - that's it, those are the three choices," he said.

Market commentator Arthur Lim said Key had stood on a platform for asset sales and there was no reason why that would not come to pass.

He said it was important the process was not "hijacked" by the investment bankers looking after the international and institutional clients at the expense of "mum and dad' investors.

Shane Solly, portfolio manager at Mint Asset Management, said it was clear that a lot of work needed to be done before the Government could embark on its asset sales programme.

"There is still not enough detail out there to form a view as to what these things are truly worth, and which ones are are in good nick and which ones are not," he said.