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Mum and Dad investors are no longer a priority

Written By: - Date published: 3:05 pm, March 27th, 2014 - 13 comments
Categories: uncategorized - Tags:

John Key billboard selling New Zealand

And now for something completely different …

Throughout the asset sales programme the mythical “mum and dad” investors have been held up as the reason why what appears to be in economic terms a very silly idea was actually very sound. The Government has claimed without proof that allowing private shareholders will instill much needed commercial discipline into the SOEs, will enliven the stock market and will create a new democratic structure where ordinary mums and dads would be able to become part of a shareholding corporate style democracy.  Nirvana for most of us will be just around the corner.

Of course the reality is that National just wants to hand out our property to its rich mates.  They have never let reality get in the way of political or corporate dogma.

And now that we are at the end of the firesale of the various power company shares the pretence is being dropped.  Institutions and not mum and dad investors will be favoured in the Genesis share float.

A few weeks ago the Government floated the possibility that only 30% and not 49% of Genesis’s shares would be sold to the public.  It expressed pessimism even though the returns were looking really good.  The Government has shaved millions off Genesis’s value so that its expected yield is around the 15% mark.  This is a phenomenally good return for a utility.  David Cunliffe estimates that at this price the Government is losing $300 million on the likely value of the shares.  To make it even better for investors the Government has promised to throw in a one for fifteen loyalty bonus for New Zealand investors.

Institutional shareholders and investors will compete for over 80% of the shares on offer with the rest being available to the mythical mum and dad investors.  For the Mighty River Power float the figures were that roughly 55% of issued shares was owned by New Zealand retail investors, 18% by New Zealand institutions and 27% by overseas institutions.  These figures give a distorted impression however as the top 11% of retail investors owned half of that particular group of shares.

No doubt any mum and dad investors have been burned by the loss in value of Mighty River Power shares and no longer have any money to spend on shares.  I suspect a few wealthy individuals and foreign corporates will be thinking favourably about investing in Genesis.

13 comments on “Mum and Dad investors are no longer a priority ”

  1. Mary 1

    We’re not at the end of the firesale, we’re at the very beginning. Watch what happens to the 51% when Key gets a third term.

    • poem 1.1

      True Mary, ” IF ” key gets a third term.

      • Mary 1.1.1

        I deliberately said when because that’s what I believe. Of course I want to be wrong but at the moment that’s what I believe because the Left is stuffed at the moment.

  2. Will@Welly 2

    It never was about “you and me”. It was always about John Key!!
    What a parlous state of affairs this country has sunk too. A money trader masquerading as a leader.

  3. Enough is Enough 3

    Well done Russel Norman and the Greens for again taking this particular bull by the horns.

    They are highlighting the hypocricy of John Key again

  4. Tracey 4

    On planet key, tony ryall believes mums and dads in nz have brokers. watch the clip from tv3 and witness this wide eyed soundbite which neatly summarise who this govt is serving.

    good on norman for calling it.

    great billboard by the way…

  5. tc 5

    ‘Mum and dad investors’ joins the list of BS phrases along with higher standards, keeping your loved ones in nz, catching oz, brighter future etc

    A catchphrase is normally the precursor for a rogering as it stands out front of a planned set of actions and outcomes. Its the business approach where you craft a front full of slogans and behind it you slash, burn and pillage.

  6. kea 6

    What’s the betting that Key can maintain his veneer of enthusiasm during his third term ?

  7. Weepu's Beard 7

    The speed and nonchalance of the deal is disturbing. It’s like they’ve just given up on the mythical Mum and Dad investors (no glamorous advertising campaign) and have dealt straight with the institutions and foreign buyers.

    Horrifying to think this govt feels so secure that the’re not bothering to hide it this time.

  8. Tracey 8

    Four out of five independent research reports from investment houses in New Zealand and Australia value Genesis Energy shares at higher than the $1.55 a share offer price announced by government Ministers last Friday.

    The highest valuations, from Edison Investment Research and Craigs Investment Partners, suggest Genesis shares could be worth $1.97 apiece, while the most conservative valuation is from Australian research house Morningstar, which places a ‘fair value’ on the shares of $1.60.


  9. unitedtribes 9

    Well I guess the outcome of MRP would have been better for all concerned without the sabotage by David Cunliff and Russel Norman saying they would nationalise power. The shares are steadily improving in value as it looks more and more obvious those two will never get near it.

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