Backers for New Zealand's national clean power sell-off

February 01, 2012
Mighty River Power's Kawerau geothermal power station

The New Zealand government is believed to have chosen the lead managers for the flotation of a national renewable energy company. The IPO of Mighty River Power leads a new round of state IPOs after a decade of inactivity.

Goldman Sachs, Macquarie Capital New Zealand and First New Zealand Capital/Credit Suisse Australia are reported by the Australian Financial Review and Bloomberg to have been appointed to manage the sale.

The government hopes that selling Mighty River Power, and four other companies including Genesis Power Ltd, Solid Energy New Zealand Ltd and Meridian Energy Ltd, will raise as much as NZD7 billion (USD5.8 billion) for the nation's depleted coffers.

Clean business investors will also be keeping a close eye on Meridian's sale as, like Mighty River, most of its generation capacity is from renewables and it has an international portfolio.

Prime Minister John Key, a former Merrill Lynch banker, is following up on election promises which won him the election in November. However, while details remain sketchy, it is understood that the state will retain majority holdings in the floated companies, only selling 49 percent.

Mighty River is considered the country's most high-profile renewable energy-focused company, which serves 392,000 electricity customers and had sales of NZD1.55 billion (USD1.28 billion) for the last financial year. Most of the company's power generation comes from hydro-electricity with its major installation at the Waikato Hydro System. It also has geothermal plants in the Taupo and Bay of Plenty regions.

The other power companies are being examined by Goldman Sachs, UBS and First NZ Capital Group and are likely to be retained for their future IPOs, although there are doubts over the sale of Meridian Energy.

Meridian has not only the largest renewable generating capacity in New Zealand but also an international presence. Based on a solid hydropower capacity, it has been developing solar and wind generating projects, inlcuding those in Australia, the Pacific Islands and the US.

The other two power firms do not have the clean or green profile of the others. Solid Energy New Zealand, for example, is primarily a coal-power producer although it has interests in biodiesel and is the country's only exporter of fuel wood-pellets. Genesis has mostly a conventional generating capacity but does have two wind projects at Castle Hill and Slopedown.