Share float plan gets tick from fund managers
Monday 23 Jul 2012 10:43 a.m.
Shares in Mighty River Power go on sale later this year (file pic)
The Government is copying large Australian share floats with a loyalty bonus and low minimum application amount to ensure wide share ownership in the sale of 49 per cent of Mighty River Power this year, brokers and fund managers say.
Investors must buy a minimum of $1000 worth of shares, those applying for $2000 worth will get that amount, and those wanting more may be scaled back, Prime Minister John Key said on Sunday.
People who hold their shares for three years will get bonus shares, he said without giving details.
He did not firm up the timing of the float, expected in September, nor hint at price. There has been speculation that the shares will have a 4 percent dividend yield.
"It appears to be the playbook for the Australian listings that have given a good outcome for both sellers and buyers," said Shane Solly, portfolio manager at Mint Asset Management.
In such listings retail investors were first in the queue, local institutions representing local savers were next and foreign investors were last and most active in the market after listing.
This model has become a "norm" for large floats.
Grant Williamson at Hamilton, Hindin, Greene said there would be plenty of room for everyone and enough tension, or demand, to get a good outcome for taxpayers.
He said those wanting more shares would be able to get them through allocations to brokers.
The Government is setting up a mechanism allowing people to apply for the shares online, rather than through brokers.
Mr Williamson said he strongly believed that new investors should seek advice from qualified professional advisers.
But fund managers say the price is the most important factor in this process and it is yet to be set.
Fisher Funds managing director Carmel Fisher said earlier this month that it was worrying that investors were treating the partial privatisation of four state-owned energy companies as "money for jam".
They were putting their hand out for as many shares as they can, irrespective of price, the dividend yield, or the growth prospects.