Amongst all the noise created by the disintegration of Judith Collins’ political career there is a much more important story that has avoided the headlines yet presents a much more significant event. The shareholding of Genesis Energy has been sold at a price that is a steal.
As I commented previously the Government made she sale of Genesis shares an unbelievably attractive offer by essentially decreasing the price to below the shares real value and thereby increasing the yield. Bill English previously warned the public that only 60% of the shares on offer may be purchased but the political embarrassment this would have caused was averted by essentially giving the shares away. Clearly this has occurred because the share offer has been heavily oversubscribed and purchases have been heavily scaled back. The expected yield is 15% which for a utility share is astronomical.
Interestingly the way the Government’s offer was structured has resulted in overseas institutions purchasing one in four of the shares on offer. You would have thought that local mum and dad investors should have been favoured. The overseas institutions could have and should have been at the back of the cue and there was plenty of local demand to purchase all of the shares.
And you have to wonder about why the decision to sell was made. The expected yield, before factoring in the effect of the loyalty bonus, is three times the interest rate that the Crown is charged. We are losing heavily. And four out of five of the institutions which valued the shares said they were worth more than what they have been sold for.
New Zealand you have been robbed.