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New Zealand Begins Genesis IPO Marketing in Final Asset Sale

New Zealand’s government began marketing the sale of a stake in Genesis Energy Ltd. in the final planned asset sale ahead of elections due Sept. 20.

Treasury Department officials, their advisers and company executives will market the sale to brokers and institutions before a book build starting March 27, Finance Minister Bill English said in an e-mailed statement.

“This process will allow the Crown to determine the expected demand from the various investor pools, at which point we will decide and announce the level of sell down for the book build process,” he said. The government will sell between 30 percent and 49 percent of the company.

Limiting the amount sold may boost the price for Genesis, the nation’s biggest energy retailer, as the government brings its asset-sales program to an end ahead of the election. It has raised NZ$3.93 billion ($3.4 billion) from selling about 49 percent of both Mighty River Power Ltd. and Meridian Energy Ltd. and the sell down of part of its stake in Air New Zealand Ltd., and is using the proceeds to invest in new infrastructure.

Genesis shares will be offered in a range from NZ$1.35 to NZ$1.65, English said. The price will be set in book build before the IPO opens to the public on March 29. The shares are expected to list on the New Zealand and Australian stock exchanges on April 17.

To encourage participation in the IPO, the government will offer New Zealanders one bonus share for every 15 owned if they have been held for a year after allotment, with a cap of 2,000 bonus shares, English said. The government reiterated it wants at least 85 percent of Genesis owned by New Zealand-based investors, including the stake it will retain.

Genesis’ market capitalization will be NZ$1.35 billion to NZ$1.65 billion, based on the indicative offer price range, according to offer documents posted on its website. It forecast a dividend of 16 cents in the year ending June 2015, for a cash dividend yield of 9.7 percent to 11.9 percent, based on the range.

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