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MightyRiverPower shares rose 4.8 percent from their offer price in their first day of trading on the NZX as investors added to their holdings after receiving less stock than they asked for.
Shares in the state-controlled power company edged up 12 cents to $2.62 from their $2.50 initial public offering price. Trading was within the offer range of $2.25 to $2.80. Some 63 million shares, about 11 percent of the available stock, changed hands.
“Shareholders who bought into it will make money,” said Milford Asset Management portfolio manager Mark Warminger. “It was a good deal, distributed well and done at the right price.”
New Zealand institutions were allocated 8.6 percent of the shares on offer and overseas funds got 13.5 percent, with both scaled back considerably. A total of 113.857 individual New Zealand investors bought shares, accounting for 26.9 percent. The government retains 51 percent.
Based on forecast dividends, the offer price implies a gross dividend yield of 4.6 percent in the 2013 financial year, rising to 5.2 percent the following year.
The debut catapults the company into fifth place among the top 10 domestic stocks on the market by value. New Zealand’s government raised $1.7 billion selling 49 percent of the electricity generator and retailer to investors and expects to detail plans for the next listing of a state-owned power company at the budget next week.
Compared with recent listings, MightyRiverPower lags the 26 percent jump on debut for the Fonterra Shareholders’ Fund, a 9 percent rise for Chorus and a 5.6 percent gain for Trade Me. It surpasses a 0.7 percent gain for Sommerset Group, a 4.7 percent rise for Kathmandu and a flat debut for Heartland New Zealand.
MightyRiverPower is the first of four SOEs plus Air New Zealand that are slated for sell down under a government policy to raise as much as $7 billion to repay debt and seed its Future Investment Fund to help fund schools, hospitals and transport infrastructure such as KiwiRail.
Either Genesis Power or Meridian Energy is most likely to be next out of the blocks. Air New Zealand could follow, though coal miner Solid Energy is being restructured to return it to profitability before it will be considered.
The government is aiming to complete the second sale this year. “We’re keen to get on with the next one,” Finance Minister Bill English said at MightyRiverPower’s listing today.
(BusinessDesk)