HONG KONG-The government of New Zealand said on Friday that the partial privatization of Meridian Energy, the country’s biggest electricity company, could raise close to $2 billion.
In what would be the nation’s largest initial public offering to date, the government said it would seek to sell a 49 percent stake in Meridian in a price range of 1.50 New Zealand dollars to 1.80 dollars apiece.
Meridian is a generator and distributor of electricity that relies entirely on hyrdopower and wind farms. It accounts for about 30 percent of New Zealand’s electricity production and distributes power to around 270,000 customers. Overseas, Meridian owns two wind farms in Australia, one of which is still under construction, and has also carried out renewable energy projects in Antarctica, Tonga and the United States.
At face value, the listing would represent total gross proceeds of 1.9 billion New Zealand dollars ($1.6 billion) to 2.3 billion dollars ($1.9 billion). But any shares bought by New Zealand individual investors are subject to a price cap of 1.60 dollars apiece, provided they are not sold within 18 months of the I.P.O. â€" so the total funds to be raised will depend on how many shares are bought by locals (New Zealand institutional investors and foreigners do not benefit from the price cap).
‘‘The price cap gives New Zealand retail applicants greater certainty around how much they will pay for Meridian shares,’’ the country’s finance minister, Bill English, said in a statement. ‘‘The government remains committed to putting New Zealanders at the front of the queue for shares.’’
After the I.P.O., Meridian will be New Zealand’s biggest company by market value, and the government will keep a 51 percent controlling stake. The I.P.O. is the second major deal to take place under New Zealand’s plan to raise funds by unloading minority stakes in state businesses. In May, Mighty River Power raised 1.7 billion dollars when the government sold a 49 percent stake in a public offering.
If local retail demand for the Meridian offering echoes that of the Mighty River I.P.O., the deal could see foreigners getting only a small slice of the shares. In May, about 440,000 New Zealanders, or almost 10 percent of the population, had registered their interest in buying shares in Mighty River. On completion of the I.P.O., individual investors acquired a 26.9 percent stake in the company, New Zealand institutions acquired 8.6 percent and overseas investors got 13.5 percent (the government retained a 51 percent stake). As of Friday, shares in Mighty River were trading 10 percent below their May I.P.O. price.
Meridian is set to take share orders from local retail investors from Sept. 30 until Oct. 18. The offer will open to institutional investors from Oct. 21 to 23. Final pricing is scheduled to be set on Oct. 23, and trading to begin on Oct. 29.
The I.P.O. is being led by the underwriters Goldman Sachs, Macquarie, and a joint venture between Craigs Investment Partners and Deutsche Bank. The retail portion of the deal is being handled by Craigs, JBWere and Macquarie.
