iNVEZZ.com, Friday, August 16th: New Zealand fuel supplier Z Energy Ltd (NZE:ZEL, ASX:ZNZ) raised NZ$840 million (£434 million) in an initial public offering (IPO) with the shares priced in the middle of the indicative price range. The Z Energy IPO is the second-largest listing on the New Zealand Stock Exchange following the market debut of state-owned geothermal energy developer Mighty River Power Ltd (NZE:MRP; ASX:MYT) in May.
**Z Energy Share Price Stays within Guidance**
Infrastructure investor Infratil Ltd (NZE:IFT) and the New Zealand Superannuation Fund, the current owners of Wellington-based Z Energy, each sold 30 percent of their stakes in the petrol retailer for gross proceeds of NZ$840 million (NZ$420 million each). The two companies are each retaining a 20 percent stake in Z Energy which supplies fuel to retail customers and large commercial customers.
Z Energy’s share price was set at NZ$3.50 in the IPO, in the middle of the indicative price range of NZ$3.25 – NZ$3.75. The Z Energy IPO values the company at NZ$1.4 billion. As the Wall Street Journal noted, Infratil and the New Zealand Superannuation Fund paid Royal Dutch Shell Plc NZ$696.5 million for Z Energy in 2010.
Infratil’s CEO Marko Bogoievski said in a statement that the market’s response to the IPO was very strong across the board. “Our feedback suggests investors have been attracted to Z Energy’s cash flows, dividend outlook and range of potential future growth areas,” he pointed out.
Z Energy expects a net profit of NZ$163 million and revenue of NZ$2.96 billion in the year ending March 31, 2014. The company plans to deliver investors a gross yield of between 8.1 percent and 9.4 percent.
Z Energy’s shares will debut on the New Zealand Stock Exchange on Monday, August 19, and will also be listed on the Australian Securities Exchange. Trading on the New Zealand exchange was halted today following a strong earthquake in Wellington. The Wellington-based stock exchange operator halted trading in all markets as a result of the quake but reopened at 3:45pm (04:45 BST).
**New Zealand’s IPO Market**
The Z Energy IPO is New Zealand’s largest listing since Mighty River raised NZ$1.7 billion (£883.4 million) in May. The New Zealand government is also planning a partial privatisation of state-owned electricity generator and retailer Meridian Energy Ltd, to take place later this year. Earlier this month, Radio New Zealand quoted analysts as estimating that the Meridian Energy sale might bring the government between NZ$400 million and NZ$700 million more than it received from the floatation of Mighty River.
Rickey Ward, head of equities at New Zealand-based Tyndall Investments, has described the country as “one of the very few destinations where there’s a lot of corporate activity”.
“Global players who can invest ‘down under’ are using this as an opportunity to get access to liquidity in companies which show long-term value,” Ward has said.
**Infratil’s share price closed 0.41 percent higher at NZ$2.46 in Wellington on 16 August 2013.**
**Mighty River’s share price closed 1.76 percent lower at NZ$2.23 in Wellington and 1.50 percent down at A$1.97 in Sydney.**