MRP float – success or failure?

Once you look past all the politicking I think it has to be seen as a moderate success, with a share price just below the range predicted. There’s been a good take up of shares from private buyers , New Zealand and international investors.

Labour and the Greens are trying to talk up various points of failure, but they ignore the reality – 49% of Mighty River has been sold at a reasonable price.

It may have been valued down by up to $200 milion due to the Labour-Green NZ Power announcement, which may also have scared off small and first time investors, but that doesn’t make the share float a failure.

I think that over a hundred thousand purchases is a reasonable number. About the only thing that would have been gained by more people investing would have been National bragging rights. It has made little or no difference to the sale price.

The success of the Mixed Ownership Model is another thing altogether. It will take years to see the real effect on Mighty River, on power generation and on power prices.

Solid Energy is a market casualty before it has had a chance to be floated, that’s just as well.

The success of MOM in National’s cuurrent term in Government will be determined as much by the next couple of floats.There has been a lot of interest in the first SOE part sale, that interest may or may not be maintained.

If Meridian goes on sale next and does at least as well then National could claim some substantial success rather than one-off success.

If the Meridian float doesn’t do so well then it would raise questions about how god an idea the MOM programme was.

Note: I have supported National’s right to progress their flagship policy but have had mixed views on the nature of the MOM programme. I would prefer it was based on more business-like decisions but election cycle syndrome means less than ideal decisions are made.

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