Meridian IPO on track

Brokers have sold 45% of Meridian Energy’s initial public offering to individual New Zealand investors at the highest possible price.

Frank Aldridge, managing director of Craigs Investment Partners, told DataRoom 565 million of the company’s shares were sold last week by brokers including Craigs at $NZ1.60 ($1.42) each.

That price is at the top of the $NZ1.50 to $NZ1.60 range set for the IPO. The stock is forecast to yield 13% in the next 12 months, making it attractive to individual investors. Individual investors will initially pay $NZ1 for Meridian stock and then 60 cents in 18 months time.

“The government objective of 85% to 90% of the stock, including the Crown, being in hands of New Zealanders seems to be on track,” says Aldridge.

More than 690 million shares are still available to other New Zealand individual investors and to institutional investors in and outside the country. Craigs, Deutsche Bank AG, Goldman Sachs Group Inc and Macquarie Group are the joint lead managers of the IPO.

For institutional investors, Meridian shares can be bid at between $NZ1.50 to $NZ1.80 a share. Like individual investors, fund managers will be required to make a $NZ1 initial payment for Meridian shares and then the balance in 18 months after an October 21 to 23 book build that will determine the final price of the stock.

“Australian, Asian and UK institutions have shown strong interest,” says Aldridge, citing its attraction as a renewable energy investment and the prospect of dividend payments, as much of the company’s spending for the immediate future has been completed.

If institutional investors, like their retail counterparts, bid at the maximum price for Meridian shares allocated to them, the IPO could raise as much as $NZ2 billion. That would make it the biggest IPO in Australasia this year.

Meridian’s roadshow will traverse the world, visiting Australia, Asia, Europe and the US. The New Zealand government is selling 49% of the company, whose market value may be as much as $NZ4.6 billion