Meridian Energy’s partial float on the New Zealand stock exchange was given an initial thumbs up by analysts but they warn the share price is likely to be volatile heading into next year’s general election.
One fund manager said the difference in share price between Labour and National could be as much as 90 cents.
The Government has sold 49 per cent of the country’s largest energy company for $1.50 a share. Investors paid an initial instalment of $1, with a further payment of 50 cents due in 18 months.
The first instalment price at the close of the NZX last evening saw the shares leap 8 per cent to $1.08 on turnover of just over $246 million.
Analysts agreed that day one of the float was successful and the closing share price was in line with expectations.
Devon Funds Management equity analyst Phillip Anderson said new investors would be pleased. “It’s enough for the new investors to be happy – they are feeling good about it – but not so much that it looks like the seller left a lot on the table.”
The general feeling among analysts was that institutions which had their share quotas scaled back had created strong demand for Meridian shares.
But the analysts warned that the general election could affect the share prices of both Meridian and Mighty River Power, which was partly privatised this year.
“My valuation for . . . [Meridian] as a whole is . . . around $1.10 if the Labour Party wins, but business as usual under National at around two bucks,” Anderson said.
That’s a huge amount of destruction of value if there is a change of Government. And consumesr won’t see any of it as Labour/Green changes to the Emissions Trading Scheme will see power prices increase.