New Zealand Green Energy IPO Raises $1.66 billion

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Thursday, October 24th, 2013
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The IPO of state-owned green power company Meridian Energy Ltd has raised $1.66 billion for the New Zealand government, in what is expected to be the fourth-largest listing in the Asia-Pacific this year.

The float saw the sale of a 49 per cent stake in New Zealand’s largest power company at a price of NZ$1.50 per share – the very bottom of a projected range of between NZ$1.50 – NZ$1.80.

Prices were pegged low in order set the stage for a strong performance post-listing, while also reflecting concerns about potential investor trepidation following the 12 per cent plunge in shares in Mighty River Power – the first major asset sale made by Prime Minister John Key as part of efforts to restore New Zealand’s national budget to health.

Meridian Energy is one of four firms in which the New Zealand government is offloading minority stakes, with the ambition of raising proceeds of around NZ$5 billion in total. The Meridian IPO is the government’s largest asset sale to date.

“Combined with NZ$1.7 billion in proceeds from the Mighty River Power offer, this will be $3.58 billion over two floats which the Government does not have to borrow to reinvest in new priority public assets,” said New Zealand’s finance minister Bill English.

Meridian is the one energy company responsible for generating the largest proportion of New Zealand’s power, supplying almost a third of the country’s electricity towards the end of last decade.

Meridian Hydroelectric Facilities

The company’s total market capitalization is NZ$3.8 billion, putting it amongst the ten largest listed companies in New Zealand. This amount falls well short of official government valuations made several years ago, however, which pegged Meridian’s value at around NZ$6 billion.

In addition to being New Zealand’s biggest power concern Meridian is also a provider of renewable energy, and in 2006 was declared by Greenpeace to be the only green electricity company in the country. In 2007 the company obtained CarboNZero certification from Landcare Research, attesting to the carbon neutral status of its power generation and retail businesses.

Meridian’s entire portfolio of power generation assets is comprised of clean energy facilities, with seven hydroelectric stations in the South Island – including six on the Waitaki River and one on Lake Manapouri, and five wind farms in New Zealand and Australia.

Analysts say that the successful Meridian IPO bodes well for the planned float of another state-owned New Zealand power company, Genesis Energy, at the start of next year.

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