Genesis sale no longer a political hot potato

Remember asset sales?  Remember how the Green-led Labour movement wanted your signatures for a referendum?  Remember how this was all going to end in tears?

With Genesis’ share sales starting today, you would be excused for wondering why this sale isn’t being opposed.

Analysts are picking demand will be high for shares in the country’s biggest electricity retailer, Genesis Energy, when its public offer opens today.

The price for shares in the state-owned energy company was announced at $1.55 last night after a bookbuild with institutional investors. The sale would raise up to $736 million for the Crown.

Finance Minister Bill English said already $620 million had been committed through the bookbuild, which was the first stage of the share offer.

At that price the shares will yield a gross dividend of 14.3 per cent, he said.

State-Owned Assets Minister Tony Ryall said the sale would take them to within the Treasury’s target range for the asset sales, with the sale of all four assets earning $4.7 billion, he said.

I’m sure it has nothing to do with the fact we are close to an election, and the Greens and Labour know the voters are sick and tired of two decades worth of manufactured asset sale outrage.  

Paul Harrison, of fund manager Salt Funds Management, said the price would be pleasing to the Government and the healthy dividend Genesis was offering next year would please mums and dads.

Genesis’ gross dividend yield of 14.3 per cent compared well to just about every listed company, brokers said.

There was also ‘‘nothing to suggest that they can’t continue paying dividends at this sort of level for some period of time,’’ said Harrison.

Genesis holds a 31 per cent stake in Kupe, as well as wind, hydro and thermal assets which could give it an advantage over rivals in dry years.

‘‘A lot of the earnings do come from the Kupe oil and gas field and that’s expected to have a life of 10 to 15 years’’

Other factors in Genesis’ favour is its large customer base and a Government sweetener of one bonus share for every 15 shares held for a year.

Another Green-led Labour fail.

Want something broken?  Get Labour on it.

 

– Stuff


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