3-pronged sweetener for “Mums and Dads” in asset sales

Article – BusinessDesk

July 22 (BusinessDesk) – Small-scale retail investors are being enticed three ways to participate in the government’s planned sale of minority stakes in four state-owned energy companies.

Key announces 3-pronged sweetener for “Mums and Dads” in asset sales

July 22 (BusinessDesk) – Small-scale retail investors are being enticed three ways to participate in the government’s planned sale of minority stakes in four state-owned energy companies.

Prime Minister John Key used his governing National Party’s annual conference in Auckland to announce a low $1,000 minimum holding threshold, a “no scaling back” provision for anyone investing $2,000 and a yet-to-be-determined loyalty bonus for hanging onto the shares for at least three years or so.

The announcements come as the government awaits the outcome of a Waitangi Tribunal hearing into Maori claims to water and geothermal energy rights, which the New Zealand Maori Council argues should be settled before the asset sales go ahead.

But while Key admitted this week that court action could delay the intended first sale of 49 percent of electricity generator and retailer MightyRiverPower beyond the third quarter of this year, the government was confident of the process it was following to recognise Maori rights and interests in water

“Selling shares in power companies doesn’t affect any of the regular and on-going discussions we have about water issues, and won’t change the outcome of them,” said Key. “So we are very confident about the process that’s going on.”

His announcements on retail investor share allocation sweeteners coincided with the announcement by the Treasury of a syndicate of New Zealand sharebroking firms and the availability of prospectuses and investment forms from 500 bank branches nationwide. Investors will be available to buy shares directly, without engaging a broker, if they choose to, with online and 0800 options being offered.

Key said the $1,000 minimum parcel rule for local investors was “low compared to other recent share offerings, for example by TradeMe and Pumpkin Patch”, while any retail New Zealand investors buying up to $2,0000 would not have their applications scaled back if there is heavy demand for the shares.

That means institutional investors could be restricted to buying fewer shares they want if small investors have plenty of appetite for them.

“New Zealanders applying for up to $2,000 worth of shares are guaranteed to receive the shares they applied for,” said Key. “Big institutions aren’t getting any guarantees, so this is another way we’re putting everyday New Zealanders at the front of the queue.”

While a loyalty bonus would also be offered in the form of additional shares, details were still being worked through, with the period shares had to be held for being the main issue.

“It’s likely to be somewhere around three years,” said Key.

(BusinessDesk)

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