Advisers lukewarm on SOE floats

The Government's $5-7 billion sell-down of state assets will kick off later this year, but financial advisers aren't jumping for joy at the giant IPO programme.

Tuesday, March 6th 2012, 6:30AM

by Niko Kloeten

Minister for State Owned Enterprises Tony Ryall has introduced new legislation to allow the partial sell-down and stock exchange listing of SOEs Mighty River Power, Genesis Energy, Meridian Energy and Solid Energy, as well as the sale of shares in Air New Zealand, in which the Government has a 73% stake.

Yesterday he confirmed the Government is aiming to undertake the first initial public offering - for Mighty River Power - around the third quarter of this year.

"The rationale for the government share offers for Mighty River Power, Genesis, Meridian, Solid Energy and Air New Zealand is very clear," Ryall said.

"We must not get into the kind of debt trap the UK and Europe are in."

But although the "mixed ownership" programme is expected to raise as much as $7 billion from investors, Institute of Financial Advisers president Nigel Tate said financial advisers are likely to play a relatively modest role.

"The majority of the shares in the IPO will go to institutional investors and will end up in superannuation funds," he said.

Tate said most clients would end up owning shares in the former SOEs regardless of whether their advisers invested their money directly.

However, he said there doesn't appear to be a groundswell of interest from clients just yet.

"I don't get a lot of clients saying, 'what about the IPO for ABC - should I get into it?'" he said. "However, these stocks will infuse themselves into their portfolios through the funds we invest in.

"The expectation will be some advisers will purchase assets - there'll be a lot of discussion about which assets to purchase."

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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