Govt share offer programme costs below target

The Treasury’s total costs for the Government’s share offer programme were $85.5 million – or 1.83 per cent of the $4.67 billion in total proceeds, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

This is slightly below the 2 per cent estimate made at the start of the programme, which excluded costs to the share offer companies themselves and the cost of incentives to New Zealand retail investors.

“This final cost is low by the standards of share offers in both New Zealand and overseas,” Mr English says. “In the context of a programme that raised almost $4.7 billion to be reinvested in new priority public assets, it represents good value for money for New Zealand taxpayers.”

Of the Treasury’s $85.5 million costs, $12.6 million was for advertising and communications, $64.9 million was for other outsourced professional services such as legal, brokerage and advisory, and Treasury’s own internal costs were $7.9 million.

The share offer companies themselves incurred an extra $35.1 million in costs associated with the programme.

Mr Ryall says that in addition to keeping costs below the initial target, the share offer programme had met all of the Government’s wider objectives.

“Firstly, it has raised billions of dollars that we can spend on new public assets New Zealanders want, without having to borrow overseas.

“Secondly, through each of the four share offers we achieved more than 85 per cent New Zealand ownership.

“Thirdly, the share offers have deepened and strengthened our capital markets, with the Mighty River Power, Meridian and Genesis Energy IPOs together adding more than $8.85 billion in capitalisation to the NZX main board.

“Fourthly, 111,000 common shareholder numbers have been issued during the share offer programme, indicating that tens of thousands of New Zealanders have become shareholders for the first time.

“Finally, mixed ownership will be good for the companies themselves, giving them extra scrutiny and accountability, and additional sources of capital,” Mr Ryall says.

The final share offer programme cost details are available at: http://www.treasury.govt.nz/commercial/resources/pdfs/mixed-ownership-model/mom-cipgso-final-20jun14.pdf