web analytics
The Standard

The Genesis share float – or is that share sink?

Written By: - Date published: 10:03 am, March 14th, 2014 - 23 comments
Categories: bill english, debt / deficit, national, Privatisation, same old national - Tags:

The details of the share float have now been announced.  According to stuff:

The Government has poured sugar on its offer of shares in Genesis Energy, pricing the company in a range below analyst valuations last month and offering a bonus share for every 15 held for just a year.

Details of the initial public offer were announced today by Finance Minister Bill English, revealing an offer price of $1.35-$1.65 a share, valuing Genesis at $1.35 billion to $1.65 billion.

The final price will be set on March 28 and investors will be able to buy shares from March 29 to April 11. The company is due to list on the NZX and the ASX on April 17.

At the offer price range, Genesis shares are expected to have a gross dividend yield of 13.5 to 16.5 per cent.

The offer terms value Genesis potentially well below the range expected by analysts from UBS and First NZ Capital. UBS had valued Genesis at $1.6b-$1.9b, while First NZ put its range at $1.4b-$1.8b.

The bonus share offer terms are sweeter than those for Mighty River Power, the first of the state-owned power companies to float last May.

Investors in Mighty River had to hold their stock for two years before receiving the bonus of one share for every 25. The maximum bonus will be capped at 2000 shares per investor.

While the Government sold down 49 per cent of Mighty River and Meridian Energy in the previous offers, it may sell as little as 30 per cent of Genesis, depending on the level of demand.

The amount of shares it will sell will be decided on March 26.

I posted about this earlier.  The yield previously was anticipated to be 9% but is now anticipated to be around 15%.  The anticipated value of the company now has a mid point of $1.5 billion compared to previous estimates of up to $2 billion.  If only 30% of the shares are sold this will result in $500 million being paid.  With a one for 15 loyalty share offer the sale proceeds could be $467 million less cost of sale.  The loyalty share offer is much more generous than the one in 25 share bonus offered during the Meridian float.  Profits will have to increase from $114 million last year to well over $200 million for the yield figure to be reached.  And you have to wonder why you would sell a share returning 15% to pay down debt where you are paying interest at 5% or so.

Bill English was on Morning Report this morning.  He was almost apologetic that Mighty River Power shareholders have done so badly and hinted that the generosity shown in this float somehow made up for things.  The Government is making sure that the share float is a success for the corporates and rich individuals who are buying shares.  Funny that but I thought they should be looking after the people of New Zealand instead.

Meanwhile gross Crown debt is $83 billion.  The share floats have done no more than stopped debt running slightly higher while at the same time divested New Zealand of income earning assets and enriched the already wealthy and the merchant bankers engaged to complete the sale.

And they say that National has the skills to handle the economy?

23 comments on “The Genesis share float – or is that share sink?”

  1. Enough is Enough 1

    Don’t waste time trying to argue the economics of this. You will you confuse your poor brain because it makes no sense.

    The intention was always to reward those people that backed them by providing funding over the past decade. Those wealthy backers have now got what they demanded and will own 48.5% of our power stations.

    It is theft and can be explained as simply as that.

  2. shorts 2

    “it means that during the election campaign…whenever the Key government tries to scare us about the prospect of a Labour/Greens cabal running the economy, or with Russel Norman being a heartbeat away from the Finance portfolio or whatever else the Crosby/Textor crew come up with to try and stampede voters into the arms of the centre-right, such tactics can be rebutted with three simple words: “Genesis share float.” At a stroke, this should vaporise any claims that National is a better, more responsible manager of the economy, and a better steward of public assets.”

    http://gordoncampbell.scoop.co.nz/2014/03/14/gordon-campbell-on-the-genesis-share-float-debacle/

    every day we get another depressing reminder of what life outside of planet key is like

    • Colonial Viper 2.1

      Sorry your strategy won’t work because people don’t see any truly alternative and viable vision for the NZ economy being presented to them.

      • blue leopard (Get Lost GCSB Bill) 2.1.1

        @ CV

        I would have thought that the ‘people’ you refer to (I assume you are referring to the ones that say they intend to vote National in the polls) believe the false claims being repeated throughout the mainstream media sources ‘that National is a better, more responsible manager of the economy, and a better steward of public assets’.

        I would have therefore thought that Shorts suggestion was a fairly good one for counteracting these false claims.

        I am of the understanding that Labour ran the country in a more fiscally responsible manner when they were last in power – one that Key spoke loudly against when he was in opposition. where he criticised them for not spending more – Labour governed the country in a manner that led to more raises in the lowest incomes and invested in a manner that led to more jobs and opportunities. This place was a better, far more hopeful place to live in under Labour.

        Perhaps your comment was a request from Labour and Greens to speak more loudly to the public on what they intend to do? – this still doesn’t discount there being a lot of merit in Shorts suggestion.

      • David H 2.1.2

        and what if the dairy market goes south?

  3. Clemgeopin 3

    It is a shame that many people STILL support this evil and incompetent stupid government believing their spin, lies and BS hook line and sinker!

    • Enough is Enough 3.1

      It is a myth that people support this government or that is is popular.

      Don’t believe the polls, there is nothing at all accurate about them and they are paid for by entities that want the hard right government.

      I have no doubt that if everyone votes this yeat National will lose by a landslide. There is a real possibilty that the record set by English in 2002 will be beaten this time around.

  4. Colonial Viper 4

    And they say that National has the skills to handle the economy?

    I think E is E has it quite right. This isn’t about running the economy badly or well, this is about crony capitalism, and gifting strategic NZ infrastructure into foreign hands. It’s also the absolute opposite of what the old school conservative base of National wants to see done.

    Further, because Labour 5 kept the SOE structure for these generators, and beyond that insisted that they become very profitable (i.e. extracting large sums of money from ordinary communities), Labour painted a big privatisation bullseye on their foreheads.

    All National is doing is pulling the trigger.

    • shorts 4.1

      good point – and still much of the opposition parties use the revenue we could be earning from these profitable SOE’s as a justification for retaining ownership – never do they talk about offering a service back to the owners at the cheapest sustainable cost

      • Colonial Viper 4.1.1

        Opposition parties who posit that it is they (and not National) who can run corporate style capitalism the best have totally lost sight that we are in the last 20-30 years of fossil fueled, relatively stable climate, global civilisation which has been taken over by the billionaire class.

        It’s like arguing who can administer the bridge on the Titanic better as the compartments fill with water.

    • Lanthanide 4.2

      “Labour painted a big privatisation bullseye on their foreheads.”

      Yep. My BF pointed out (as I’ve posted here before), what Labour should have done is moved the power generators into the ownership of the Cullen fund. That way the dividend stream would go right into their pockets, it would allow the government to have more of an arms-length appearance in terms of “taxation-by-stealth”, guaranteed a continuing funding stream for the fund and made the political argument to sell them much more difficult.

  5. Steve Withers 5

    I’ve never expected National to look after the people of NZ. They are, after all, the “Multi-National 1% Party (NZ)”.

    This is easily seen by simply looking at what they DO….and who benefits.

    It certainly isn’t the people of NZ.

  6. thatguynz 6

    National absolutely have skills in running the economy MS – we all just incorrectly assume that they are running the economy for us, the people.

    Lets take their economic approach to its logical conclusion. What happens when we can no longer afford to service the debt on our governmental exposure? What will the IMF/WB/BiS be pushing for? Further asset sales? Greater involvement in NZ policy? Austerity? There is plenty of precedent for what comes next. The entire global economy is based on debt and the control that the ownership of that debt imbues them with.

  7. Skinny 7

    I am now of the belief we start talking about buying our assets back, less the ticket clipping. This was always going to be a failed ideological driven move.

    Reading this snake oil shows slippery at his best.

    http://i.stuff.co.nz/national/politics/4582922/John-Key-reveals-plan-for-asset-sales

  8. captain hook 8

    this is called paying off your mates with a parcel of dodgy shares so that you can take windfall earnings when the supply spikes.
    There is no market.
    Just an artificial creation by the tories to delude themselves and others into believeing that nothing is something.
    straight out of the milton friedman, ronald reagan,george bush playbook for ripping off the taxpayer in the name of de-regulation.
    what a crock of shit yet we still fall for it.
    When is someone going to do a proper analysis and kill this thing once and for all.

  9. Pete 9

    I’ve decided to create an image macro every day until the election. This will obviously be a hit and miss kind of thing (people don’t always get the references). Here’s today’s.

    Share and enjoy.

  10. Ad 10

    Personally it would be great if the state gave more oportunities to invest New Zealanders’ savings with them, but not for monopoly and lazy and conservative assets like generators, or sad returns like Treasury bonds.

    Whereas if NZSuper could propose something – for example an invitation to get directly into these alternative power generator companies in the US, or one of the Crown Research entity spinoffs – I am sure New Zealanders who could would be pretty enthuiastic.

    • PapaMike 10.1

      I would expect like all of the previous partial sales that all the Kiwisaver Accounts have substantial investments in these companies.
      Their expected return is about 7.5%, very much larger than bank term deposits of 4%
      If people do not like this they should tell their Kiwisaver Investment Managers, and see what they say.
      It was said yesterday that the NZ (hic) Banks are sitting on $150 billion of term deposits so there is plenty of investment money available.

      • Ad 10.1.1

        Yes of course on the Kiwisaver thing, but it would be good to identify where the state is heading and invest alongside it as well.

  11. Tracey 11

    this is odd. english said, as did key, that in good conditions these companies would reach higher sale value. yet this is both economic “good times” and a “rockstar economy” yet we havent got good prices per forecasts. stranfe indeed

    • Draco T Bastard 11.1

      It was never about getting a good price, it was always about dis-empowering the people of NZ by taking their assets and wealth away from them. This is how the rich are reinstating feudalism.

  12. Midas 12

    So to get the full cap of 2,000 bonus shares you’d need to buy 30,000 initially which at the top of the price range ($1.65) would require an initial investment of $49,500. Yay for the mums and dads of New Zealand who can write out a cheque for $49,500 just like that.

    Not, of course, that this was ever really about Kiwi mums and dads.

Links to post

Recent Comments

Recent Posts

  • Housing crisis hurting export growth
    If Steven Joyce wants to revive his failing export growth target he needs to make sure the Government gets to grips with the housing crisis, says David Parker, Labour’s Export Growth and Trade spokesperson. “Our exporters are struggling to compete… ...
    2 days ago
  • Gallipoli’s lesson: never forget, never repeat
     A special monument to one of our greatest war heroes should be a priority for the new Pukeahu National War Memorial Park, Labour Leader Andrew Little says.  “This will honour the spirit of Lieutenant Colonel William Malone, who led 760… ...
    2 days ago
  • Minister for who? Women, or Team Key?
    Louise Upston yesterday broke her silence on John Key’s repeated unwanted touching of a woman who works at his local café, to jump to the defence of her Boss. Upston repeated Key’s apology but, according to media reports “she refused… ...
    GreensBy Jan Logie MP
    2 days ago
  • Taxpayer bucks backing US billionaire
    Kiwis will be horrified to know they are backing a Team Oracle subsidiary owned by a US billionaire, Labour’s Sports and Recreation spokesperson Trevor Mallard says. It has been revealed today that a Warkworth boat building company, which is wholly… ...
    3 days ago
  • English’s sins of omission: ‘Nothing left to be done’ on housing
    When Bill English said ‘there is nothing left to be done’ on the Auckland housing crisis he had overlooked a few things – a few things, Labour’s Housing spokesperson Phil Twyford says.  “He’s right if you ignore: ...
    3 days ago
  • Climate change now hurts Kiwis
    Kiwis have twice been given timely and grave warnings on how climate change will hit them in their hip pockets this week, says Climate Change spokesperson Megan Woods.  “The first is the closure of the Sanford mussel plant and the… ...
    3 days ago
  • Clean, green and chocolate!
    Like many people I absolutely love chocolate! But until recently I hadn’t given much thought to how it was grown and produced. Fair trade and ethical food production are core Green Party principles, so yesterday Steffan Browning and I were… ...
    GreensBy Mojo Mathers MP
    3 days ago
  • National admits loan shark law not up to it
    National has admitted new laws to crack down on loan sharks, truck shops and dodgy credit merchants aren’t up to the task of protecting vulnerable consumers, Labour’s Commerce spokesperson Kris Faafoi says. “Paul Goldsmith has acknowledged the laws might just… ...
    3 days ago
  • Power and the Prime Minister
    I’d like to acknowledge the young woman* who has publically told her story. It was a very brave thing to do. She kept her story very simple and focussed on her experience of what happened. It told of unwanted attention… ...
    GreensBy Jan Logie MP
    3 days ago
  • Extra holiday offers time to reflect
    The Mondayisation of Anzac Day provides New Zealanders with an opportunity to spend more time with their families and their communities, Dunedin North Labour MP David Clark says. “This is the first time legislation I introduced, to have Anzac and… ...
    3 days ago
  • More angst and anguish for red zone locals
    Local residents will be bitterly disappointed by the Government’s cherry picking of the Supreme Court’s decision regarding compensation for red zoned property owners, Labour Canterbury Earthquake Recovery spokesperson and Port Hills MP Ruth Dyson says. “Home owners have taken all… ...
    4 days ago
  • Australia shows why we need a sovereign wealth fund now
    Australia has not managed its great mining boom well, says HSBC’s chief economist for Australia and New Zealand, Paul Bloxham. When times are good, governments need to save for the bad times that will inevitably follow, and this can be… ...
    GreensBy Russel Norman MP
    4 days ago
  • Pure Water- pure rip off
    New Zealanders’ rights to fresh water must be protected before commercial allocations are given, but the Government is allowing resources to be taken, says Kelvin Davis MP for Te Tai Tokerau.  “The Government needs to resolve the issue of water… ...
    4 days ago
  • Cabinet paper reveals weak case for Iraq deployment
    A heavily redacted copy of a Cabinet paper on New Zealand’s military deployment to Iraq reveals how weak the case is for military involvement in that conflict, says Labour’s Defence spokesperson Phil Goff.  The paper warns that given the failure… ...
    4 days ago
  • Malaysia’s booty is Kiwis’ lost homeownership dream
    It’s unsurprising the Auckland property market is so overheated when Malaysians are being told they can live large on Kiwi’s hard-earned rent money, Labour’s Housing spokesperson Phil Twyford says. “A Malaysian property website lists nearly 4000 New Zealand houses and… ...
    4 days ago
  • Ministry’s food safety resources slashed to the bone
    The Ministry for Primary Industries’ failure to monitor toxic and illegal chemicals in red meat is a dereliction of duty, Labour’s Primary Industries and Food Safety spokesperson Damien O’Connor says. “MPI compliance officer Gary Orr today admitted National’s much-vaunted super… ...
    4 days ago
  • Ministry must protect organic food industry
    The Ministry for Primary Industries must take urgent action to protect New Zealand’s $150 million organic food and beverage industry by establishing a certification regime, Labour’s Primary Industries spokesperson Damien O’Connor says. “Despite working with Organics Aotearoa on the issue… ...
    5 days ago
  • Tony Abbott, indigenous rights, and refugees
    This week, Tony Abbott has visited Aotearoa New Zealand, bringing with him his racist policies against indigenous Australians and his appalling record on refugee detention camps. Abbott has launched a policy “to close” remote aboriginal communities, which is about as… ...
    GreensBy Catherine Delahunty MP
    5 days ago
  • PM’s housing outburst bizarre
    Labour’s Housing spokesperson Phil Twyford has described the Prime Minister’s latest comments on the Auckland housing crisis as bizarre. “John Key is deep in denial. He must be one of the only people left who are not concerned about the risk… ...
    6 days ago
  • Deflation: Another economic headache linked to housing crisis
    National’s housing crisis is causing even further damage with the second consecutive quarter of deflation a genuine concern the Reserve Bank can do little about, as it focusses on Auckland house prices, says Labour’s Finance spokesperson Grant Robertson. “This is… ...
    6 days ago
  • Pot calling the kettle black over fossil fuel subsidies.
    Over the weekend alongside nine other countries the New Zealand Government has endorsed a statement that supports eliminating inefficient subsidies on fossil fuels. Fossil fuel subsidies are a big driver of increasing emissions. Good on the Government for working internationally… ...
    GreensBy Gareth Hughes MP
    6 days ago
  • At last – a common sense plan for Christchurch
    The Common Sense Plan for Christchurch released by The People’s Choice today is a welcome relief from the shallow debate about rates rises versus asset sales, Labour’s Christchurch MPs say. "Local residents – who have spent weeks trawling through the… ...
    7 days ago
  • National must lead by example on climate change
    The National Government must meet its own climate change obligations before it preaches to the rest of the world, Labour's Climate Change spokesperson Megan Woods says. "Calls today by Climate Change Minister Tim Groser for an end to fossil fuel… ...
    1 week ago
  • Biosecurity rethink a long time
    The Government has opened New Zealand’s borders to biosecurity risks and its rethinking of bag screening at airports is an admission of failure, Labour’s Primary Industries spokesperson Damien O’Connor says. Nathan Guy today announced a review of biosecurity systems in… ...
    1 week ago
  • Chinese rail workers must be paid minimum wage
    KiwiRail must immediately stop further Chinese engineers from working here until they can guarantee they are being paid the New Zealand minimum wage, Labour’s MP for Hutt South Trevor Mallard says. The Ministry of Business, Innovation and Employment today released… ...
    1 week ago
  • Better consultation needed on Christchurch asset sales
    The Christchurch City Council (CCC) should be promoting wide and genuine public consultation on its draft ten year budget and plan given the serious implications for the city’s future of its proposed asset sales, outlined in the plan. Instead, it… ...
    GreensBy Eugenie Sage MP
    1 week ago
  • ‘Healthy Families’ a good start but not enough to tackle obesity relate...
    Today the Government is making a the meal out of the launch of its ‘Healthy Families’ package to promote ‘healthier decisions’ and ‘changing mindsets’ over nutrition, physical activity and obesity. Great! The programme is based on a successful model from… ...
    GreensBy Kevin Hague MP
    1 week ago
  • ‘Healthy Families’ a good start but not enough to tackle obesity relate...
    Today the Government is making a the meal out of the launch of its ‘Healthy Families’ package to promote ‘healthier decisions’ and ‘changing mindsets’ over nutrition, physical activity and obesity. Great! The programme is based on a successful model from… ...
    GreensBy Kevin Hague MP
    1 week ago
  • No more sweet talk on obesity
    The Government should be looking at broader measures to combat obesity rather than re-hashing pre-announced initiatives, Labour’s Health spokesperson Annette King says.  “While it is encouraging to see the Government finally waking from its slumber and restoring a focus on… ...
    1 week ago
  • Government two-faced on zero-hour contracts
    The Government should look to ban zero-hour contracts in its own back yard before getting too high and mighty about other employers using them, Labour’s Health spokesperson Annette King says. “Information collated by Labour shows at least three district health… ...
    1 week ago
  • Scrutiny of battlefield deaths should continue
    As New Zealand troops head to Iraq under a shroud of secrecy, the Government is pushing ahead with legislation to remove independent scrutiny of incidents where Kiwi soldiers are killed in hostile action overseas, Labour’s Defence spokesperson Phil Goff says.… ...
    1 week ago
  • Damp-free homes a right for tenants
    Labour is urging tenants to use a little known rule which gives them the right to live in damp-free rental homes. Otago University researchers have today highlighted the Housing Improvement Regulations 1947 as a way tenants can force landlords to… ...
    1 week ago
  • National must take action on speculators
    The Government must take action on property speculators who are damaging the housing market and shutting families and young people out of the home ownership dream, Labour Leader Andrew Little says.  “There are a number of options the Government could… ...
    1 week ago
  • Milk price halves: A $7b economic black hole
    Global milk prices have halved since the peak last year, creating an economic black hole of almost $7 billion that will suck in regions reliant on dairy, crucial industries and the Government’s books, says Labour’s Finance Spokesperson Grant Robertson. “The… ...
    1 week ago
  • Kitchen plan set to swallow up health boards’ funds
    The financial impacts of implementing a proposal to outsource hospital food, forced on them by a crown-owned company which is now facing an auditor-general’s inquiry, are being felt by district health boards across the country, Labour’s Health spokesperson Annette King… ...
    2 weeks ago
  • Reserve Bank scathing of Government
    The Reserve Bank’s most scathing critique to date of National’s inability to handle the housing crisis shows the Bank is sick of having to pick up the pieces, Labour Leader Andrew Little says.  “John Key continues to deny there is… ...
    2 weeks ago
  • Time for McDonald’s to upsize work hours
    Labour is calling on McDonald’s to have more respect for their workers and offer them more guaranteed work hours. McDonald’s is proposing to guarantee its workers 80 per cent of their rostered hours, Labour’s spokesperson for Labour Issues Iain Lees-Galloway… ...
    2 weeks ago
  • Brownlee misses the boat on asbestos
    Gerry Brownlee has once again missed an opportunity to improve the lives of Cantabrians post-earthquakes, Labour’s Canterbury Earthquake Recovery spokesperson Ruth Dyson says. A new report from the Royal Society of New Zealand and the Prime Minister’s Chief Science Adviser,… ...
    2 weeks ago
  • Government must come clean on troop deployment and protections
    New Zealanders deserve more than to hear about their troops’ deployment overseas from Australian media, Opposition Leader Andrew Little says. “News from Australia that Kiwi troops are on their way to Iraq this week is another example of the culture… ...
    2 weeks ago
  • Cancer prevention calls gain momentum
    Research showing bowel cancer treatment sucks up more public health dollars than other cancers once again highlights the need for a national screening programme, Labour’s Health spokesperson Annette King says. A study by Otago University, which found colon cancer is… ...
    2 weeks ago
  • Burger King shows zero-hour contracts not needed
    The abandonment of zero-hour contracts by Burger King is further evidence good employers do not need to use them, Labour’s spokesperson on Labour Issues Iain Lees-Galloway says. "Congratulations to the Unite Union and Burger King for settling an employment agreement… ...
    2 weeks ago
  • Kiwis deserve more than reheats
    The Government looks set to rely on regurgitated announcements for this year’s Budget if today’s speech is anything to go by, Labour Leader Andrew Little says. “National has been building up to this Budget for seven long years, promising a… ...
    2 weeks ago
  • Landlords not cashing in on insulation schemes
    The fact so few landlords have taken up the generous taxpayer subsidy for retrofitting shows it is time to legislate minimum standards, says Labour’s Associate Housing spokesperson Poto Williams. “Many landlords aren’t using Government insulation schemes because they don’t want… ...
    2 weeks ago
  • Zero excuses, end zero hour contracts now
    It’s time Workplace Relations Minister Michael Woodhouse cut the weasel words and banned zero hour contracts, Labour Leader Andrew Little says. “Michael Woodhouse today acknowledged zero hour contracts are unfair. ...
    2 weeks ago
  • We’ve reached Peak Key with ‘artificial target’
    John Key’s attempt to redefine his cornerstone promise of two election campaigns as an artificial target suggests his other promises are works of fiction, says Labour’s Finance spokesperson Grant Robertson. “For seven years and two election campaigns, John Key has… ...
    2 weeks ago
  • Top 10 need to know facts on climate change
    All the numbers and stats around climate change can be confusing, so we’ve put together a handy list of the top 10 numbers about climate change that we should all know- and then do something about. You can sign up here to… ...
    GreensBy Frog
    2 weeks ago
  • Campbell Live a bastion of investigative journalism
    The announcement that current affairs programme Campbell Live is under review and may be axed has sparked outrage from the New Zealand public, for good reason, says Labour’s Broadcasting Spokesperson Clare Curran. “Investigative journalism is a precious resource in today’s… ...
    2 weeks ago
  • Ground Zero for ‘disastrous’ contracts
    Yesterday the Green Party called on the Government to follow the leadership of Restaurant Brands and ditch zero-hour contracts. Currently it looks like the Government is a large part of the zero-hours problem. It allows these types of “non-jobs” to… ...
    GreensBy Jan Logie MP
    2 weeks ago
  • Trust in National will disappear with deficit
    Bill English is set to break his promise to get the books back in the black this year and lose the trust of Kiwis who have had to do it too hard for too long, says Labour’s Finance spokesperson Grant… ...
    2 weeks ago
  • Dorothy Jelicich passes away
    It is with sincere sadness that the Labour Party conveys its sympathies and condolences to the bereaved family of Dorothy Jelicich who passed away last night at the age of 87 years, says the MP for Mangere, Su’a William Sio.… ...
    2 weeks ago

Public service advertisements by The Standard

Current CO2 level in the atmosphere