AUCKLAND — Shares in the government-controlled utility Mighty River Power, the first of several such New Zealand companies to be partially privatized, rose nearly 5 percent Friday in their first day of trading.
On Wednesday, the government set the share price at 2.50 New Zealand dollars, or $2.08, giving the company a market capitalization of 3.5 billion dollars. The price jumped 22 cents to 2.72 when the company listed at 12:30 p.m. local time Friday — about 8 percent above the initial price — but settled later in the day to close at 2.62 dollars, a 4.8 percent rise.
Mighty River Power’s initial public offering raised 1.7 billion dollars, and its market capitalization makes it the largest offering of a state-owned company in the country’s history, according to data from Goldman Sachs NZ. Trading volume Friday was 70.5 million shares.
“It’s a pass — probably a pass rather than an outstanding success,” Greg Smith, head of research at the investment research company Fat Prophets, said of the offering.
Mighty River Power is the first company to be partially privatized by the center-right government, which plans to float as much as 49 percent in each of several state-owned companies on the New Zealand stock exchange, the NZX.
The mixed ownership plan has run into financial and political obstacles, including legal action by a group representing the indigenous Maori.
On April 18, the opposition Labour Party and its potential coalition partner, the Green Party, jointly announced plans to create an intermediary between electricity generators and retailers, in an effort to cut prices for consumers. The Labour Party said that would save households between 230 and 330 dollars a year, but the government called the idea a policy of the “far left” that risked deterring foreign investment in New Zealand.
Reflecting the significance of the Mighty River Power offering, on Friday the NZX replaced the front page of its Web site with the company’s logo and its share price displayed in large print.
Mr. Smith, of Fat Prophets, said the share price could come down in the coming months. “The New Zealand share market as a whole has been trading near its all-time highs,” Mr. Smith said.
“If you were to see a bit of weakness in the broader market, you could well see that come back below the 2.50,” he said, adding that the price could even fall below the 2.35-dollar range.
The Green Party, which opposes privatization, said Friday that trading volumes indicated that many retail investors had already sold off their shares for a quick profit.
“National underpriced the shares so that the price would bounce up after listing,” party co-leader Russel Norman said in a news release, referring to the governing National Party. “That ‘good news’ story came at the cost of tens of millions of dollars in reduced sale revenue to the taxpayer.”
He also criticized the fact that foreign investors were being allowed to buy shares. “Already, we’re seeing the company slip further out of Kiwi ownership,” Mr. Norman said.
Article source: http://www.nytimes.com/2013/05/11/business/global/shares-rise-after-ipo-of-new-zealand-power-utility.html?partner=rss&emc=rss
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