NZ government to sell full 49 percent of Genesis Energy, with instos, brokers offered 40 percent

Wednesday 26th March 2014

The government will sell 49 percent of Genesis Energy in the last of its scheduled asset sales after feedback from institutions and brokers gave it confidence it didn't need to reduce the size of the selldown.

Institutional investors and New Zealand brokerages will be offered 40 percent of the company, or 400 million shares, through a bookbuild that opens tomorrow, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall said in a statement.

So-called mum and dad investors will then be offered up to 90 million shares, or 9 percent of the company, through a general offer that opens on Saturday. That includes shares set aside for loyalty bonus share allocations.

The government had previously said it may sell anywhere between 30 percent and 49 percent of Genesis, depending on demand. The shares are being offered at an indicative range of $1.35 to $1.65 per share, with the final price determined by the bookbuild and announced on Friday, the ministers said.

"We have received positive feedback on the offer to date from local and international institutions and New Zealand share brokers," English and Ryall said in their statement.

The offer includes one bonus share for every 15 owned, capped at 2,000 bonus shares, provided the investor holds the stock for 12 months. Based on the indicative price range, the implied gross dividend yield for the 2015 year is forecast to be in a range from 13.5 percent to 16.5 percent, the government said earlier this month. Analysts at Forsyth Barr dubbed it a "turbo charged dividend" in a note last week.

Genesis is the smallest electricity SOE by asset value but by far the country's largest electricity and gas retailer with more than 650,000 customer connections. It owns a mixture of gas and coal-fired, wind and hydro plant.

As with the selldown of MightyRiverPower and Meridian Energy, the taxpayer remains the controlling shareholder, with at least 51 percent of the shares, and the government is committed to 85 percent New Zealand ownership at the time of the float, albeit foreign investors could then buy shares issued to New Zealanders. The sales will raise more than $4 billion.

The government is aiming for a listing date on the NZX of April 17.

As expected the initial offer looks very attractive.

But you must check it to see if this is right for you.

If you are interested in more information on Genesis Energy Offer and wish to receive a prospectus please click below.

BusinessDesk.co.nz

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