Sell-down of NZ state energy companies

BusinessDesk: Sell-down of NZ state energy companies would gross $6.8 bln, latest valuations show

New Zealand’s sell-down of state-owned energy companies would gross about $6.8 billion, provided investors agree with the latest valuations by investment banks and research houses.

The valuations, published on the Crown Ownership Monitoring Unit website, are about $2 billion higher than the stock exchange operator, NZX, had assumed in its review of its index methodologies, which was announced last month.

Forsyth Barr valued Solid Energy at $1.69 billion, Macquarie valued Genesis Energy at $1.76 billion and Meridian Energy at $6.53 billion, while First NZ Capital valued Mighty River Power at $3.63 billion for a total of $13.61 billion. The government plans to sell down its holdings to around 50 percent.

It also aims to reduce its stake in Air New Zealand to about 50 percent from 75 percent, which would net the government some $220 million based on current pricing. That would leave the newly listed companies accounting for almost 6.4 percent of the NZX 50 Index’s market capitalisation.

The NZX is currently seeking feedback on plans to change the weightings of companies in the benchmark index to ensure it doesn’t become ‘less investable’ because of the amount of stock retained by the government and not available for trading. Its existing methodology was introduced in 2003, with further adjustment aimed at ensuring no single company dominated the index.

While the full details of the adjustments are complex, it boils down to approximately $3.5 billion, or 9.1 percent, of the NZX 50’s market value of $38.3 billion being due to the modifications, according to an NZX report last month.

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