NZ government provides novel approach to Meridian Energy IPO float
The government of New Zealand would be seeking to accumulate nearly NZD2 billion or USD1.68 billion from its sale of its 49% stake in Meridian Energy Ltd. This is reported to be the largest IPO to be conducted in New Zealand.
The share price offer for the largest power firm in New Zealand would range between NZD1.50 and NZD1.80 per share according to a prospectus published by the company from its Wellington, New Zealand headquarters. The applicants, in a process advised, would pay no more than NZD1.80, with an upfront payment of USD1.00 with the balance to be paid a year and a half later.
According to New Zealand Finance Minister Bill English, through a statement, "Offer proceeds will depend on the final price of the second installment and the mix of retail and institutional investors. The government remains committed to putting New Zealanders at the front of the queue for shares."
This IPO is the second part of an asset sales policy of the government. For this sale, the expected windfall would reach NZD5 billion. As a result of the previous experience in the Mighty River Power Ltd float which had the share trading beflow the IPO price, the government had created this process to increase initial yield and expand demand for the shares.