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Mighty River ceo in pre-IPO talks

Mighty River Power's ceo Doug Heffernan has met with Australian fund managers in the lead-up to the state-owned company's expected $1.5 billion partial float.

The joint-lead managers of the float – First New Zealand Capital/Credit Suisse Australia, Macquarie Capital NZ and Goldman Sachs NZ – organised meetings in Sydney and Melbourne last week, attended by Mr Heffernan and cfo William Meek.

MRP will be the first partially privatised state-owned company under the government's mixed ownership model – as long as it's not blocked by a Maori Council challenge to be heard by the Supreme Court later this week.

The equity raising is expected to list on both sides of the Tasman.

MRP spin doctor Katherine Litten told NBR ONLINE the meetings were an update on the company's operational performance and the electricity generator and retailer provided no business forecasts or a float timetable at last week's meetings.

"The meetings weren't about targeted roadshows because there's no offer in the market at the moment.

"It wasn't about providing any sort of forecast information or offer information because it's not there."

She says the company is still working to the government's timetable for the partial float of between March and June.

A report in the Australian Financial Review says fund managers there are hoping for more success with MRP than Fonterra, with some reporting no allocation in the dairy giant's investment fund despite placing what they thought were aggressive bids.

MRP had a 12% growth in sales and a jump in customer numbers in the three months to December 31, the company announced today.

dwilliams@nbr.co.nz

More by David Williams

Comments and questions

I thought it was to be a local IPO.
What's this about a dual listing on both sides of the Tasman?

I guess alot of Kiwis with any spare money live and work in Australia. My AUD will go along way buying MRP, that wouldn't have happened had I stayed in NZ.

I'm guessing I'll have to get family member to apply for the stock and transfer it at a later date?

So much for Kiwis being at the front of the queue for shares.

It was inevitable that opponents would question any mention of Australian interest as some sort of purported reversal of the Kiwis first policy. Then again, the same armchair critics have also argued that a 100% Kiwi share issue would reduce the price received by the taxpayer for the shares sold.
The reality is that the government's commitment to give Kiwis first dibs on the shares is not remotely affected by the sensible strategy of keeping offshore fund managers informed and up to date. It is also simple reality that the government and its selected IPO managers know full well that there are a number of balancing issues to manage here, not least of which is the fundamental importance of the first of the MOM IPOs being successful.
With two more electricity sector floats to follow it is critical in balancing the competing priorities to also ensure that there is plenty of investor appetite for the Merdian and Genesis offers - in other words (just spelling it out for those who don't understand these things), not to load investors up so much with one so that there is no one left to invest in the later offers.
Similarly, given the importance of ensuring that the taxpayer is not short-changed, it is essential that the offers be structured in such a way that there is still healthy competition for the shares so as to maximise the effective price achieved.
One way this can be achieved is by ensuring that there is a different part of the offering for fund managers, and that there is some healthy competition from Australian and international fund managers to keep the price up. Being realistic, there was never any chance that "Mum and Dad" investors were ever going to take the whole lot of all three offers - simply, utterly nonsense to think otherwise. It was always going to be essential that there was good competition in the fund management market (including by many Australian fund managers who have a fair number of New Zealand clients) to ensure economic pricing. Proposals to dual list the shares on the ASX make sense because it would increase liquidity, and liquidity is fundamental to getting efficient pricing.
This, of course, has absolutely nothing at all to do with share allocation policies.
So far everything that has been done has been sensible with respect to the goal of balancing the desired outcomes.

If the Maori Council can block the sale I will be raising a glass to them this Waitangi Day.

This you can sort of understand dual listing....whereas Fonterra...at about $500m and massively oversubscribed out of the US, Europe and Asia, made no sense at all. But, the way bankers work...the success of that will prove up the dual list on ASX. Rod Drury's dual listing and stock price hike after that will also be a factor. Xero Dual list + Fonterra Dual list = MRP, Meridian, Gen, Solid Dual list.....and Air NZ already dual listed.

Why dual list? Mighty River Power doesn't do any business of note in Australia? I can understand Fletchers since they trade heavily over the ditch, but MRP doesn't make sense to me.

It should NOT be to facilitate Australian trade in NZ shares. If there are barriers to Australians trading in NZ equities, lets solve those problems at our bourse, rather than encourage a dual list.

The reason for dual listing is not a function of where a company does business, its about where there is the demand to buy or sell and asset.

The NZ market is still highly illiquid when compared to the rest of the Asia Pac region (with the exception of some Asean bourses) - to create a market you need buyers and sellers.. hard to get that by just listing in NZ.

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