web analytics

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.”


    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.


  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


  • A charge on plastic bags – debunking some myths
    The launch of my Members’ Bill last week, which would introduce a 15 cent charge on single-use plastic bags at the check-out, has generated a lot of comment on mainstream and social media. From The Paul Henry Show at the ...
    GreensBy Denise Roche
    8 hours ago
  • National’s $1trillion property sandcastle
    The National government's failure to fix the housing crisis has seen the ballooning and unsustainable property market touch the $1 trillion mark, Labour’s Finance spokesperson Grant Robertson says. "Labour wants an economy that creates high wage work that is based ...
    9 hours ago
  • Government failure on housing crisis drives Reserve Bank to add tools
    If the Government was delivering a comprehensive plan to fix the housing crisis, it is unlikely that the Reserve Bank would be continuing to pursue debt to income limits for lending for housing, says Labour’s Finance spokesperson Grant Robertson. ...
    1 day ago
  • International embarrassment for NZ likely over National’s failure to protect Maui dolphin
    New Zealanders who care about Maui dolphin should prepare to feel embarrassed: the Government is about to be put to shame on the international stage for its lack of action to protect Maui’s dolphin. The International Whaling Commissions’ 66th Biennial ...
    GreensBy Eugenie Sage
    3 days ago
  • Why don’t we spend $1b to keep people out of jail, rather than spending it on keeping them in?
    Earlier this week, Corrections Minister Judith Collins announced the government’s ‘solution’ to our burgeoning prison population. It seems that most, if not all, of Bill English’s hard-won surplus is going to disappear into another round of prison-building.  That must be ...
    GreensBy David Clendon
    5 days ago
  • PKE Ship Sent Packing – Not Too Soon
    It is appropriate that the palm kernel expeller (PKE) ship off Tauranga has been sent packing. For weeks I have been saying this ship needed to be sent away, but it seems as if MPI has been trying to find ...
    GreensBy Steffan Browning
    5 days ago
  • Do you #LoveSnow?
    I was a lucky kid. When I was about five or six my mum and auntie took me up to Whakapapa on Mt Ruapehu and taught me to ski. As a young kid I thought there was no bigger ...
    GreensBy James Shaw
    5 days ago
  • Awa Kairangi/Hutt River – Swimmable?
    On Thursday night I hosted a great swimmable rivers meeting organised by the local Greens in Heretaunga (Hutt Valley). It was great to see about 70 people attend and engage in the topic. We were welcomed by Te Atiawa representative ...
    GreensBy Catherine Delahunty
    5 days ago
  • September benefit figures disappointing
    The Government is out of touch with the reality that fewer people are going off the benefit and into employment or study, says Labour’s Social Development spokesperson Carmel Sepuloni.  “The quarterly benefit numbers for September are concerning. They show that ...
    5 days ago
  • MFAT officials refuse to back Prime Minister on Saudi sheep claims
    An Ombudsman’s interim decision released about the existence or otherwise of legal advice on the multimillion dollar Saudi sheep deal shows MFAT has failed to back up the Prime Minister’s claims on the matter, says Labour MP David Parker. “The ...
    5 days ago
  • Barry Coates on his first weeks in Parliament
    Week one in Parliament has been quite an occasion. I would like to share the experience. I had given up on the prospect of getting into Parliament before the election and had been enjoying the diverse work I was doing ...
    GreensBy Barry Coates
    6 days ago
  • Nats still planning to take Housing NZ dividend
    Housing New Zealand’s Statement of Performance Expectations shows that the National Government intends to pocket $237m from Housing New Zealand this year including a $54m “surplus distribution”, despite promises that dividends would stop, says Labour’s Housing spokesperson Phil Twyford. “After ...
    6 days ago
  • Parliament must restore democracy for Ecan
    Parliament has a chance to return full democracy to Canterbury with the drawing of a member’s bill that would replace the Government’s appointed commissioners with democratically elected councillors, says Labour’s Canterbury Spokesperson Megan Woods. “In 2010, the Government stripped Cantabrians ...
    6 days ago
  • Police struggle to hold the line in Northland
    Labour’s promise of a thousand extra police will go a long way to calming the fears of people in the North, says the MP for Te Tai Tokerau Kelvin Davis.  “Police are talking about the Northland towns of Kaitaia and ...
    7 days ago
  • Vote Sooty Shearwater/Tītī for Bird of the Year
    Sooty shearwater (Puffinus griseus) are amazing and deserve your vote in Forest and Bird’s Bird of the Year competition.  They make one of the longest known bird migrations, flying an annual round trip of 64,000 kms across the entire Pacific ...
    GreensBy Eugenie Sage
    7 days ago
  • Urgent action on agriculture emissions needed
    Immediate action is required to curb agricultural emissions is the loud and clear message from Climate change & agriculture: Understanding the biological greenhouse gases report released today by the Parliamentary Commissioner for the Environment, says Labour’s Climate Change spokesperson Megan ...
    1 week ago
  • Super Fund climate change approach a good start
    Labour Finance Spokesperson Grant Robertson and Climate Change Spokesperson Dr Megan Woods have welcomed the adoption of a climate change investment strategy by the New Zealand Super Fund. “This is a good start. It is a welcome development that the Super ...
    1 week ago
  • Energy use going in the wrong direction
    New data out this week from Statistics NZ paints a concerning picture of energy use across the economy under this National Government. You won’t be surprised to hear that there is some seriously worrying information here about how dirty our ...
    GreensBy Gareth Hughes
    1 week ago
  • Raising the age the right thing to do
    The announcement today that the Government will leave the door open for young people leaving state care still means there is a lot of work to do, says Labour's Spokesperson for Children, Jacinda Ardern "The Government indicated some time ago ...
    1 week ago
  • Junior Doctors go on Strike
    Thousands of junior doctors took strike action for 24 hours this week for better working conditions and safer working hours.  The Green Party supports their cause, and particularly their claims to reduce the number of days worked from up to ...
    GreensBy Denise Roche
    1 week ago
  • Coleman plays down the plight of junior doctors
    Junior doctors are crucial to our health services and the industrial action that continues tomorrow shows how desperately the Government has underfunded health, says Labour’s Health spokesperson Annette King.  “Jonathan Coleman’s claim that he has not seen objective evidence of ...
    1 week ago
  • Inflation piles pressure on National and Reserve Bank
    While many households will welcome the low inflation figures announced today, they highlight serious questions for both the National government and the Reserve Bank, Labour’s  Finance Spokesperson Grant Robertson said.  "While low inflation will be welcomed by many, the ...
    1 week ago
  • Officials warned Nat’s $1b infrastructure fund ineffective and rushed
    Treasury papers show the Government rushed out an infrastructure announcement officials told them risked making no significant difference to housing supply, says Labour’s housing spokesperson Phil Twyford.  “Like so much of National’s housing policy, this was another poll-driven PR initiative ...
    1 week ago
  • More cops needed to tackle P
    New Police statistics obtained in Written Questions show John Key is losing his War on P, highlighting the need for more Police, says Opposition Leader Andrew Little.  “New Zealanders expect serious action on P but today’s hodgepodge of half-measures won’t ...
    1 week ago
  • Strengthening our relationship with the Rātana movement
    It was a privilege to visit Rātana Pā last week with fellow Greens’ Co-leader James Shaw, our Māori Caucus and senior staff to meet with the leaders of te iwi mōrehu, to strengthen the ties between the Green Party and ...
    GreensBy Metiria Turei
    1 week ago
  • MBIE docs show country needs KiwiBuild, not Key’s pretend “building boom”
    John Key’s spin that New Zealand is in a building boom does not change the massive shortfall in building construction as new MBIE papers reveal, says Labour Party housing spokesperson Phil Twyford.  “We can fix the housing crisis, by the ...
    1 week ago
  • 1 in 7 Akl houses now going to big property speculators
    Speculators are running riot in the Auckland housing market making life tougher for first home buyers, says Labour’s housing spokesperson Phil Twyford.  Newly released data from Core Logic shows a 40 per cent increase in the share of house sales ...
    2 weeks ago
  • Disconnected thinking dirties the water
    Iain Rabbitts’ belief that drinking water quality, charging for water use and the land use that leads to water quality degradation should be treated separately is part of the problem we have right now in this country. The connection is ...
    GreensBy Catherine Delahunty
    2 weeks ago
  • Report back from Hands Off Our Tamariki hui
    This week I attended a hui in Otaki organised by Hands Off Our Tamariki about the proposed reforms to the Child Young Persons and their Families Act. Moana Jackson and Paora Moyle spoke.  They expressed deep, profound concern about the proposed ...
    GreensBy Jan Logie
    2 weeks ago
  • Labour mourns passing of Helen Kelly
    Helen Kelly was a passionate advocate for working New Zealanders and for a safe and decent working life, Leader of the Opposition Andrew Little says.  “Helen Kelly spent her adult life fighting for the right of every working person to ...
    2 weeks ago
  • National’s visionless immigration policy
    National’s recent immigration announcement is a continuation of the visionless approach to government that it has displayed in the last three terms. Rather than using the levers of government to implement a sustainable immigration policy that benefits new and current ...
    GreensBy Denise Roche
    2 weeks ago
  • Andrew Little: Speech to the Police Association Conference 2016
    Police Association delegates, Association life members and staff, representatives from overseas jurisdictions. Thank you for inviting me here today. The Police Association has become a strong and respected voice for Police officers and for policing in New Zealand. There is ...
    2 weeks ago
  • 1,000 more police for safer communities
    Labour will fund an extra 1,000 Police in its first term to tackle the rising rate of crime, says Leader of the Opposition Andrew Little. “Labour will put more cops on the beat to keep our communities safe. ...
    2 weeks ago
  • Call for all-party round table on homelessness
    Labour is calling on the Government to take part in a roundtable meeting to hammer out a cross-party agreement on ending homelessness.  Labour’s housing spokesperson Phil Twyford said the country wanted positive solutions to homelessness, and wanted the political parties ...
    2 weeks ago
  • Seclusion rooms in schools
    Schools are undoubtedly stretched and underfunded to cope with students with high learning support needs. But this cannot justify the use of rooms (or cupboards) as spaces to forcibly isolate children. It has emerged via media that this practice continues ...
    GreensBy Catherine Delahunty
    2 weeks ago
  • Public should get a say on new Waikato power station
    I had an opinion piece published in the Waikato Times about a controversial proposal to build a new gas-fired power station. It’s not on their website yet, so here it is: If you think the public would get a say ...
    GreensBy Gareth Hughes
    2 weeks ago
  • MSD and their investment approach
    The Government talks about investment but there is no investment. It is not investment if it isn’t over the whole of life and if there is no new money  — Shamubeel Eaqub   Investment sounds like adequate resourcing but this ...
    GreensBy Jan Logie
    2 weeks ago
  • Certainty needed for community services
    A couple of months ago I was at a seminar where three community organisations were presenting. Two of the three presenters were waiting to find out if their organisation would get a contract renewed with MSD. Not knowing if their ...
    GreensBy Jan Logie
    2 weeks ago
  • Domestic Violence – some advice for the media
    For the purpose of this piece, I’m going to use Domestic Violence (DV) as a proxy for intimate partner violence. DV is not isolated to physical abuse in a relationship between people with the same power. DV is a pattern of ...
    GreensBy Jan Logie
    2 weeks ago
  • Leroy’s New Paw Prints
    Leroy, an Auckland great dane recently received a new 3D printed bionic leg after cancer was discovered. I think this is a fantastic story and highlights the real potential of additive manufacturing, or 3D printing Leroy’s prosthetic was printed in titanium and was ...
    GreensBy Gareth Hughes
    2 weeks ago