IPO's of NZ-owned utility companies to be a hard task

July 16
4:38 AM 2013

According to the New Zealand's largest equity fund manager, the New Zealand government may well have a problem securing investors to its upcoming offering of shares in a state-owned power company.

AMP Capital Investors New Zealand Equities officer, Guy Elliffe, had said that the initial public offering of Meridian Energy Ltd. is "going to be really challenging." Adding that, "investors have absorbed a lot of supply, so there's a few digestion issues, and Mighty River could have been a more edifying experience."

Elliffe said that state-owned utilities carry political risk and that itself could hamper demand for their shares from private investors. He, however, added that state-owned utility firms were interesting companies and are usually well managed.

Government opposition parties said they would most likely transform the industry's framework if voted into government next elections by establishing a state agency to purchase wholesale electricity at a controlled price. These statements added uncertainty over the future revenues of state-owned power and other utility companies. 

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