28 May 2013

Govt not worried over Mighty River share price fall

8:19 pm on 28 May 2013

The drop in the price of Mighty River Power shares has not put the Government off its partial privatisation programme, but Opposition parties say it is a sign of failure.

The Treasury on Tuesday announced the appointment of advisers on the sale of shares in Meridian Energy and Genesis Energy, even as the Mighty River Power share price languishes well below its sale price.

Shares in Mighty River Power were sold for $2.50 in early May, but were trading lower at $2.37 on Tuesday.

Labour Party leader David Shearer says the fact the Mighty River Power share price has dropped since its share offer earlier in May is evidence that the Government's policy is in tatters.

"The wheels have come off this policy - there's no doubt about that. I think New Zealanders will be going in to this as they have been in the past. And let's face it, in the past it was mainly corporates and big-noters that were buying the shares anyway, so I think it's a mess, a fiasco."

Green Party co-leader Russel Norman agrees, saying the Mighty River Power sale was a failure.

"What we're seeing here is a failed privatisation project. They said they'd get 250,000 investors; they only got 113,000. And the price has tanked - it started at the low end at the beginning anyway. I think this just shows National didn't have a clue what it was doing."

Dr Norman says that will have an effect on the scheduled sale of Meridian Energy shares later this year.

The Government announced in the Budget earlier in May that Meridian will be offered for partial sale in the second half of this year, subject to market conditions.

But Finance Minister Bill English thinks the sale will still go well and the Government is happy for individuals to make their own investment choices.

Mr English says for most people it is a long-term investment and does not believe it will have a negative impact on the share float. However, he says the Government won't put the shares up for sale if the demand is weak.

The Government made $1.7 billion from the Mighty River share float.

The Treasury has appointed Deutsche Bank, Craigs Investment Partners, Goldman Sachs and Macquarie Capital to handle the sales of minority shareholdings in Meridian and Genesis.

Law firm Bell Gully will handle the legal side of the Meridian sale.

No decision has been made on the timing of the Genesis sale.