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New Zealand Raises $1.6 Billion From Sale of Meridian Shares

Meridian Energy wind farm
A wind turbine stands near the coast at the Te Uku wind farm, operated by Meridian Energy Ltd., in Raglan, New Zealand. Photographer: Brendon O'Hagan/Bloomberg

New Zealand will raise NZ$1.88 billion ($1.6 billion) from the sale of shares in Meridian Energy Ltd., the biggest initial public offering in its history.

Shares in state-owned Meridian, the nation’s largest power company, were sold to investors at NZ$1.50 apiece, which was the bottom of the NZ$1.50-to-NZ$1.80 offer range, Finance Minister Bill English said in a statement yesterday. Investors will pay NZ$1 a share upfront and the remainder 18 months later.

The sale of 49 percent of Meridian is the second IPO in Prime Minister John Key’s asset-sales program that seeks to raise about NZ$5 billion by the end of next year. The government is allowing investors to pay for the shares in two installments and capped the price for retail buyers at NZ$1.60 after state-owned Mighty River Power Ltd. fell from its May offering price.

Mighty River raised about NZ$1.7 billion. Key has also pledged to sell shares in Genesis Energy Ltd. and to reduce the government’s stake in Air New Zealand Ltd. to generate cash for infrastructure spending and reduce government debt.

“Meridian has attracted a different mix of investors than we saw with Mighty River Power earlier this year,” English said. “While demand was strong and broad based, overall we saw fewer retail investors bidding for larger parcels of shares.”

Meridian will have 62,000 shareholders when it lists on the New Zealand and Australian stock exchanges on Oct. 29.

Retail Investors

Of the 1.26 billion Meridian shares available, about 749 million or 60 percent were sold to retail investors, English said. New Zealand institutions took 160 million shares and overseas fund managers took 347 million.

Mighty River closed in Wellington yesterday at NZ$2.20 from an offer price in May of NZ$2.50 a share.

Meridian is New Zealand’s biggest power company, with seven hydroelectric dams and four wind farms generating about 30 percent of the country’s electricity needs. It also has a wind installation in Australia and another under construction.

Meridian had assets of NZ$7.74 billion at June 30 and revenue of NZ$2.7 billion in the 12 months through June, according to its IPO prospectus.

New Zealand appointed Goldman Sachs Group Inc., Macquarie Group Ltd. and a partnership of Deutsche Bank AG and Craigs Investment Partners Ltd. in May to manage the Meridian IPO.

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