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New Zealand's Mighty River in strong stock market debut

11 may 2013, 11:21
0
Shares in hydro-electric generator Mighty River Power debuted on the New Zealand stock exchange at NZ$2.73 ($2.29) Friday, a 9.2 percent premium on the NZ$2.50 initial public offer (IPO) price, AFP reports.

New Zealand's conservative government has partially privatised the utility in the first stage of a plan to raise NZ$5.0-7.0 billion ($4.2-5.9 billion) from asset sales and return the budget to surplus by 2014-15.

The IPO, completed earlier this week, raised NZ$1.7 billion for the government, which will retain a 51 percent stake in the company.

After opening at NZ$2.73, Mighty River shares eased back to NZ$2.66 in mid-afternoon trade, still 6.4 percent up on the NZ$2.50 offer price.

"It's trading in the range we would have expected," said Finance Minister Bill English, who is expected to outline further details of the government's privatisation plans in the budget next week.

He has previously said it will sell off 49 percent stakes in energy companies Meridian and Genesis, while also reducing its holding in flag carrier Air New Zealand from 76 to 51 percent.

State-owned coal producer Solid Energy was also part of the initial sale plan but has been withdrawn as it struggles to cope with weak global prices.

English said the strong gains seen in Mighty River's opening session was likely to increase interest in subsequent sell-offs.

"The whole exercise and the success of it will build the confidence of retail investors that this is something that they can do," he told reporters.

"We believe they will be looking for further opportunities."

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