Treasury seeks retail brokers for partial privatisations

Tuesday 29th May 2012

The Treasury wants a list of brokers who will target retail investors in shares of partially privatised energy companies.

The department is seeking to appoint a panel of firms for the retail, or so-called "Mum and Dad" component of the government's mixed ownership model, where it will sell down minority stakes in MightyRiverPower, Meridian Energy, Genesis Energy, and Solid Energy, and reduce its holding in national carrier Air New Zealand.

The Treasury is expecting as many as 250,000 retail investor applications for each of the power company sell-downs. When the government privatised Contact Energy in 1999, it attracted more than 160,000 retail investors.

The government expects to spend $100 million in investment bank fees as it seeks to raise between $5 billion and $7 billion from the floats. The cash raised will be used to fund investment in new infrastructure, with the loss-making KiwiRail's network upgrade first in line.

The Treasury has issued a request for proposal from firms interested in running the offer to retail investors for the sell-down of MRP later this year, as well as putting their name on the list for future transactions. The offer was published on the Government Electronic Tender Service today.

Brokers are unlikely to win the work if they don't have access to a "substantial retail distribution network in New Zealand" and will need to have acted as a co-lead manager or co-manager in a capital raising that attracted at least $25 million, Treasury said.

Successful firms will have to help market the sale to retail investors, attend roadshow meetings, "use all reasonable endeavours to procure subscriptions from New Zealand resident retail investors for the offer," and offer advice as required, the RFP document says.

Members of the retail syndicate won't be allowed to market, offer, or sell shares to institutional investors, unless it's in their capacity as one of the joint lead managers.

First New Zealand Capital working with Credit Suisse Australia, Macquarie Capital New Zealand, and Goldman Sachs New Zealand are the joint lead managers for this year's MRP sale, while UBS New Zealand, Forsyth Barr working with Merrill Lynch, Deutsche Bank and Craigs Investment Partners are also available for subsequent offers.

Last week the Treasury issued an RFP to appoint a bank to process the payments specifically for retail investors, with ability to cater to Australian applicants a requirement.

Earlier this month the government launched a privatisation website to provide basic information aimed at retail investors.

BusinessDesk.co.nz

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