The Genesis sale

March 31st, 2014 at 9:00 am by David Farrar

Stuff reports:

Analysts are picking demand will be high for shares in the country’s biggest electricity retailer, , when its public offer opens today.

The price for shares in the state-owned energy company was announced at $1.55 last night after a bookbuild with institutional investors. The sale would raise up to $736 million for the Crown.

Finance Minister Bill English said already $620 million had been committed through the bookbuild, which was the first stage of the share offer.

At that price the shares will yield a gross dividend of 14.3 per cent, he said.

I wasn’t going to buy Genesis shares as I had purchased Meridian and Mighty River Power shares. But that yield was too attractive.

As the possibility of a clear Labour/Greens Government fades, the chance of their barmy competition destroying policy being implemented fades, and the share prices of the sector shares should all improve.

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37 Responses to “The Genesis sale”

  1. peterwn (3,164 comments) says:

    “As the possibility of a clear Labour/Greens Government fades” – herein lies the danger for National. It becomes tempting for core supporters to not bother being actively involved with the election campaign. They must not yield to this temptation.

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  2. rouppe (916 comments) says:

    I didn’t buy into MRP or MELCA because the yield was too low, and they were paying more in dividends than they were making in profit, which is obviously unsustainable.

    However as the pencils have sharpened, this yield was too attractive, and once the bonus shares are in the bank I can have another look at their forecasts to decide whether to keep them, or sell during a National government before the horses get scared

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  3. Ed Snack (1,738 comments) says:

    Yep, dived in again. That yield does look good, but does it mean that Genesis is making too much profit in a regulated non-competitive market ?

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  4. wreck1080 (3,734 comments) says:

    but, if labour do win, people are going to take a blood bath.

    And, the balance between left coalition/right is only a few seats. It just takes one scandal and boom.

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  5. stigie (916 comments) says:

    Shares have risen in the other electricity companies over the last week or so, which means also investors are fairly certain now there is going to be a National lead government come September.

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  6. gump (1,488 comments) says:

    That yield implies that the shares are being sold too cheaply.

    I’m not too happy about that. We should be maximising the sale price (and minimising the yield).

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  7. Allyson (41 comments) says:

    Of great advantage to the Genesis float is the knowledge there will be no Labour Green Government next year

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  8. itstricky (1,571 comments) says:

    I wasn’t going to buy Genesis shares as I had purchased Meridian and Mighty River Power shares. But that yield was too attractive.

    Ever born any thought as to the bunch of people that these dividends used to bring benefit to who don’t have the luxury of dithering over whether to now buy their “share” of that benefit? Your musings about share price and return sound awfully self centred.

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  9. Fentex (867 comments) says:

    At that price the shares will yield a gross dividend of 14.3 per cent, he said.

    A strong indication, I think, that this sale is for a poor price. And for that reason I disapprove.

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  10. Neil (556 comments) says:

    Ho hum. Another asset sale of the same ilk.
    I’m a great believer in these sales but by their very nature have as much financial sex appeal of a skunk.
    Electricity companies are not what they were. With power consumption down and competition strong don’t expect any capital gain.
    Why would anyone buy three electricity companies !! Far better to buy one at a good price and sit on it.
    Dividends are the one good area- they are pretty reliable. Not share price.
    There needs to be a crash course for investors on what the market offers and general principles.

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  11. Yoza (1,547 comments) says:

    Utterly appalling, if these shares are returning over 14% then this isn’t an asset sale it is institutionalized corruption. This is the sort of thing that goes on in tinpot dictatorships, where the local despot sells state assets to himself and his powerful backers for an unrealistically low price. Like I have said before, this government is a feeding frenzy of the rich.

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  12. wreck1080 (3,734 comments) says:

    @yoza – if its so good why don’t you risk your money?

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  13. flipper (3,570 comments) says:

    The resident dickhead, aka yoza (et al) says: “….this government is a feeding frenzy of the rich.”

    Oh dear….
    straight from Das Kapital, para ?, pp ??

    I think yoza should started its education again – at Level 1.

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  14. Cunningham (821 comments) says:

    itstricky (1,078 comments) says:

    “Your musings about share price and return sound awfully self centred.”

    No what is self centred is the fact the Labgreens torpedoed the sales and cost the country billions of dollars for their own political purposes. That is the ultimate in self centred behavious.

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  15. griffith (1,111 comments) says:

    Do you want some of yozas company when you go to school flips?

    Try learning a little science to add to the accountancy number fiddling wingnut.

    CO 2 = green house gas !

    Kids science at the level of a seven year old .

    shocking I know but….

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  16. NoCash (255 comments) says:

    wreck1080 (3,475 comments) says:
    March 31st, 2014 at 9:37 am
    but, if labour do win, people are going to take a blood bath.

    And, the balance between left coalition/right is only a few seats. It just takes one scandal and boom.

    One word, stag.

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  17. chickadee (12 comments) says:

    Don’t worry Yoza in 20 years half the greedy baby boomers will be dead or in care. Then there will be plenty for everybody (I think over 900,000 houses will come available so lot of supply)
    Greedy baby boomers expecting us to care for them when they have leeched all the free stuff. R.I.P greedy boomers.

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  18. Yoza (1,547 comments) says:

    wreck1080 (3,476 comments) says:
    March 31st, 2014 at 10:38 am

    @yoza – if its so good why don’t you risk your money

    Because it is wrong and I have principles.

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  19. Keeping Stock (10,106 comments) says:

    itstricky said

    Ever born any thought as to the bunch of people that these dividends used to bring benefit to who don’t have the luxury of dithering over whether to now buy their “share” of that benefit? Your musings about share price and return sound awfully self centred.

    When you work hard, and get a bit of money in the bank, you have a lot more choices itstricky. DPF is entitled to do whatever he wants with HIS money, as am I with mine. That’s a concept that the Left seems to struggle with, given that they think they can spend MY money better than I can :D

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  20. Albert_Ross (249 comments) says:

    itstricky, try looking at it this way.

    Through your relationship with the Government, you used to own a small share of power generating and distribution capacity and of public money.

    Through your relationship with the Government, you now own a small share of less power generating and distribution capacity and more public money.

    If you individually want to go back to where you were, ie to own more power capacity and less money, that option is available to you.

    But I don’t want that. Why would you want to make me?

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  21. wreck1080 (3,734 comments) says:

    “Yoza (1,280 comments) says:
    Because it is wrong and I have principles.

    My goodness, best you’d get back to your cave before it gets too cold out.

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  22. Tauhei Notts (1,609 comments) says:

    I told my broker to get me $50,000 worth. He said that demand is so high that I was scaled back to $12,000 worth.
    People who do not take advantage of this most incredible initial public offering should consider joining the Green Party. They are obviously phucked in the head.
    Tip; go for 2000 shares or you will be scaled down.

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  23. jcuk (586 comments) says:

    As you scurry around to make your 14% profit in one year I wonder what the future holds for the shareholders when the companies are compelled to do something meaningful about those who cannot afford the product. As to if there is a future for the shareholders appears to rest with NZFirst … a gamble I’m not going to take.

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  24. Yoza (1,547 comments) says:

    Keeping Stock (9,749 comments) says:
    March 31st, 2014 at 12:33 pm

    itstricky said
    Ever born any thought as to the bunch of people that these dividends used to bring benefit to who don’t have the luxury of dithering over whether to now buy their “share” of that benefit? Your musings about share price and return sound awfully self centred.
    When you work hard, and get a bit of money in the bank, you have a lot more choices itstricky. DPF is entitled to do whatever he wants with HIS money, as am I with mine. That’s a concept that the Left seems to struggle with, given that they think they can spend MY money better than I can :D

    It has nothing to do with who is better at spending money, it is about a self serving minority helping themselves to public assets that were created collectively for the benefit of all New Zealander’s. Just like you are prohibited from spending your money to buy slaves, so you should be prevented from buying public assets without a clear and unquestionable mandate, the thieves buying and selling these shares definitely haven’t demonstrated they have that public assent.

    A rich people feeding frenzy. Horrible to watch.

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  25. RightNow (6,675 comments) says:

    I’m buying them for my kids. They’re not rich (neither am I) but by the time they’re ready to buy their own homes they will have something to help with the deposit.

    Gee, imagine if you were some bitter leftard, envious about a parent investing in their kids’ futures. The bile building up in your gut would really be causing ulcers right now wouldn’t it? Sad.

    Ever born any thought as to the bunch of people that these dividends used to bring benefit to who don’t have the luxury of dithering over whether to now buy their “share” of that benefit?
    Yep, I already subsidise them, there’ll be no change to their income. Try pretending they share the burden of state debt at the same time you pretend they share ownership of state assets.

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  26. itstricky (1,571 comments) says:

    When you work hard, and get a bit of money in the bank, you have a lot more choices itstricky. DPF is entitled to do whatever he wants with HIS money

    Ah, the mating call of the personal responsibility crowd. Closely followed by its copulation cry of ME ME ME MINE MINE MINE HIS HIS HIS ME ME ME. An archived recording of it muttering the word ‘ours’ is said to be a hoax.

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  27. itstricky (1,571 comments) says:

    Sorry I don’t get it RN. You’re down playing the sale because it’s State debt but at the same time buying for your kids, presumably because its a good investment? Talking of bitter bile have you ever considered that, let’s say, your kid’s high school or university might be worse of in the future for loss of dividend from these assets? Let me guess – no you haven’t – ’cause you got your share, right?

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  28. itstricky (1,571 comments) says:

    I see what you’re saying now RN. So if we’re all one big household with costs why would we sell well performing assets first? They are well performing assets aren’t they? You’ve done your homework on them right?

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  29. OneTrack (2,614 comments) says:

    itstricky – “of in the future for loss of dividend from these assets? ..”

    But, of course, the published policies of the Labour/Green hydra mean there will be little future dividend from these companies in the hard-left price controlled environment called NZ Power.

    Oh, for the halcyon days, when Clark could ream power consumers at will, rich and poor, via their power bills, to pay for whatever she had promised to someone that year.

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  30. Nick Archer (137 comments) says:

    I plan to get some, the price is below the value so some good old fashioned Benjamin Graham value investing is in order…

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  31. RightNow (6,675 comments) says:

    “Talking of bitter bile have you ever considered that, let’s say, your kid’s high school or university might be worse of in the future for loss of dividend from these assets?”

    Hahahahaha, have you considered that capital from the sale of the assets might be invested in schools to help kids NOW – why delay investing in kids’ futures, it apparently has very positive returns? And aren’t Labour and the Greens saying they’ll shut down dividends from power companies?

    But to turn your argument on some real bile spewers, did you see the vitriol slung at National when they directed some funding into private schools? The calls from the left for private schools to be shut down were very shrill, they clearly didn’t think through that the GST collected on private school fees alone is significantly more than any subsidies the schools get.

    Hope you get that ulcer seen to.

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  32. Tauhei Notts (1,609 comments) says:

    Yoza at 12.30.
    I have given investment advice in my post at 2.35 p.m.
    Interestingly, as I am not an accredited financial advisor it is against the law for me to give investment advice.
    What is unusual is that although it is against the law for me to give investment advice to people as naive, in investment matters, as Yoza, it is perfectly within the law for me to give advice on masturbation to a wanker like Yoza.
    Weird, eh?

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  33. itstricky (1,571 comments) says:

    Hahahahaha, have you considered that capital from the sale of the assets might be invested in schools to help kids NOW – why delay investing in kids’ futures, it apparently has very positive returns? And aren’t Labour and the Greens saying they’ll shut down dividends from power companies?

    I see. A couple of mill. today sprinkled into 20 different directions versus what could have been a few bill. of steady income over many years. Your statement makes so much sense. With short sighted thinking like that I’d urge you to go and visit your financial advisor now and double check you’ve done the right thing for your circumstances. In the meantime, try not to sell anything else for a quick buck, just for a little while, at least.

    Private schools. No, I didn’t see that. I’ve no idea what you’re on about. Feel free to direct me if you will.

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  34. itstricky (1,571 comments) says:

    it is perfectly within the law for me to give advice on masturbation to a wanker like Yoza.

    So. I went back and read your posts:

    I told my broker to get me $50,000 worth. He said that demand is so high that I was scaled back to $12,000 worth.

    After that I’m pretty sure I agree with Yoza, And I’m pretty sure any average Joe reading that would sum it up as coming from someone who’d be well qualified to give masturbation advice. Good golly man (or woman) – You’re that guy who shouts everyone dinner when they’re not expecting it just to show how well off you are, aren’t you?

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  35. Yoza (1,547 comments) says:

    Tauhei Notts (1,503 comments) says:
    March 31st, 2014 at 10:29 pm

    Yoza at 12.30.
    I have given investment advice in my post at 2.35 p.m.
    Interestingly, as I am not an accredited financial advisor it is against the law for me to give investment advice.
    What is unusual is that although it is against the law for me to give investment advice to people as naive, in investment matters, as Yoza, it is perfectly within the law for me to give advice on masturbation to a wanker like Yoza.
    Weird, eh?

    Does all that money compensate for whatever it is you feel you are lacking or will it never be enough.

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  36. SPC (5,392 comments) says:

    They should not sold at that price – taxpayers are being ripped off.

    But since they are being sold at that price, yes I bought some.

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  37. SPC (5,392 comments) says:

    The contradictions that exist.

    While I want farmers to have their rain, I might get higher Genesis dividends if there is low rainfall.

    While I support the re-purchase of power company shares (at the price they were sold at), I have decided to own some of the shares for their attractive dividends meantime.

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