Monday, February 03, 2014

Selling something that nobody wants to buy

National's privatisation of our electricity companies has been a disaster, costing the country almost half a billion dollars while ripping off buyers. So naturally, its full steam ahead for the next one:

Details of how the Government plans to float Genesis Energy could be out by the end of next month, but fund managers say it will need to be heavily discounted to get investors on board.

Last week, Prime Minister John Key confirmed his Government's intention to complete its state-owned asset sales programme by selling up to 49 per cent of Genesis Energy.

Past indications have been that Genesis would float in the first half of 2014 on a timetable similar to Mighty River Power, which listed on May 10, 2013.

But Treasury officials are believed to have already begun visits to institutional investors in preparation for the float and expectations are that it is likely to happen sooner.

Those fund managers want bigger bonus offers and bigger dividends. Partly that's them doing their job of trying to rip off the taxpayer for their clients. But its also a recognition that Genesis is a company that nobody really wants to buy. The New Zealand stock market is flooded with partially state-owned electricity companies, and anybody who wanted a piece of one has already got it. The result is that if National wants to sell Genesis (and that seems to be the driving goal - not getting a good return for the public, but simply dumping it on the market) it is going to have to do so at bargain basement rates. Which will be very good news for their wealthy donors and cronies, who will get a cheap licence to print money by endlessly raising electricity prices - but very bad news for the New Zealand public.

If this is an example of National's "better economic management", we're all better off without them.