The Mixed Ownership Model Has Been a Win – Win

In May 2013 the New Zealand government engaged in a strong push towards partially privatising a number of our major infrastructure businesses, by listing them on the New Zealand Stock Exchange. The Government sold down 49% of the ownership in three electricity companies to a range of investors including Kiwisaver funds, iwi, mum-and-dad investors and institutions. The program began with the initial public offering (IPO) of Mercury New Zealand and was soon followed by the sell-down of equity in Meridian Energy. Lastly, in April 2014, Genesis Energy began trading. It was a process that generated a substantial amount of debate, with those in opposition arguing on the grounds of a loss of control and that dividends would now be going into private hands. Those in favor of the program countered that once out of state ownership the assets would be better managed, have far more capital discipline and that a stronger platform for dividend growth and collateral benefit to all New Zealanders would be achieved. This has unequivocally proved to be the case.

The total amount realized by the Government through selling shares in these three state-owned enterprises was $4.2bn. The current value for their remaining shareholdings today sits at a massive $11.4bn. The residual 51% stake that the Government has in Meridian Energy alone is worth $6.3bn (50% more than was received for the total sum received through the partial IPO process!)…

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