Sale Process Begins for New Zealand's Mighty River Power

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Researched by Industrial Info Resources Australia (Perth, Australia)--Mighty River Power (Auckland, New Zealand) is New Zealand's leading electricity generation and retail company and, up until now, has been operating as a state-owned enterprise. Following a controversial and lengthy process, the decision to float the company on the New Zealand stock market is now in motion, and the government is preparing the company for its 49% sale. The government will float Mighty River Power in the second quarter of the year and expects there to be a secondary listing on the Australian Stock Exchange.

A record number of people have pre-registered to buy shares in Mighty River Power. Records show that 290,659 people signed up to take part in the government's partial sell-down of the company. This is nearly 50,000 people more than the number who signed up for Contact Energy's (NZX:CEN) (Wellington, New Zealand) float in 1999. There is still two weeks left before the pre-registration process will close.

Solid Energy (Christchurch, New Zealand) is another major state-owned enterprise in New Zealand, and recent announcements indicate a huge debt associated with the company. Analysts say the debt has added pressure on the New Zealand government to get a strong price for shares in the selling of Mighty River Power.

Investors in New Zealand signed up for shares in Mighty River Power, with 35,000 booking their interest on the first day alone. The government is pleased with the amount of interest. Pre-registration is optional for anyone until March, and there is no advantage in pre-registering earlier. If all 35,000 who signed up become shareholders in Mighty River Power, they will equal about half of Contact Energy's shareholders. Fletcher Building (NZX:FBU) (Auckland) is the country's biggest listed company by sharemarket value, with about 44,000 shareholders.

Once pre-registration is complete, the New Zealand Treasury will begin allocating shares, under which interested investors are guaranteed at least a $1,650 stake in the company when it lists in May. The rationale behind this direct investment route is to put as many of Mighty River Power's shares in the hands of the public. When the Treasury is satisfied that retail opportunity has been met, institutional and foreign investors will have a chance to bid for a part of the sale. An offer document for the float is expected to become available in mid-April, ahead of its listing in May.

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