Good time to sell power companies - NZX chief
Thursday 21 Feb 2013 9:58 a.m.
The head of the NZX says the Government's partial sell-off of New Zealand's power companies will be "good for the country".
"What will happen with the Government's share offer programme is we'll get 100,000 or 200,000 New Zealanders investing in the share market, share investing will become popular again," NZX chief executive Tim Bennett told Firstline this morning.
"That will be good for them and good for the country."
Contact Energy, New Zealand's largest power company listed on the share market, last week announced it would be slashing more than 100 jobs, despite following that up with news its first half profits were up 29 percent.
Labour said the job cuts were evidence that now is the worst possible time to be selling power companies.
"Contact used to be owned by the people and National sold it off," said state-owned enterprises spokesman Clayton Cosgrove.
"Now it has majority foreign ownership and those people invest because they want to make money. When demand is flat they have a couple of choices - hike electricity prices or cut costs, and that means axing jobs."
But Mr Bennett disagrees, saying the market is "probably the best it's been in 10 years".
"We have a lot of capital on the sidelines ready to deploy, the raising or the sell-down by Infratil and NZ Super last week in Auckland International Airport just goes to show there are investors that are willing to invest in good New Zealand companies.
"And clearly the power companies provide a very good opportunity for New Zealanders."
The NZX itself has reported a 32 percent drop in full-year profit, while revenue rose just 2.4 percent.
Mr Bennett says the result is disappointing, saying last year's late surge on the market wasn't enough to overcome what was a tough year.
"Last year was a relatively low year for capital raises – probably of the last 10 years, one of the worst three… And then we grew the cost base – some of that was one-off items, but a lot of that was to rebuild some of our staff and infrastructure in order that we can capture the opportunities that we see in the capital markets this year."