Government likely to need bigger inducement to pull in mum and dad shareholders.
The Government will have to bump up the sweeteners to get enough mum and dad investors to buy into Meridian Energy to keep up its promised target of 85 per cent local ownership, an analyst says.
Treasury officials met local investment bankers yesterday and are expected to decide within the week on who will be the joint lead managers for Meridian.
Six groups are expected to bid for the deal with the contract to sell up to 49 per cent of the $6.58 billion company potentially worth more than $20 million in fees. The three joint lead managers for Mighty River Power earned up to $12.9 million in total for its partial sell-down including a bonus which is worth up to $4 million if the company meets certain targets. Fees for the brokers and banks involved were on top of that.
The Government has promised at least 85 per cent of Meridian will stay in local ownership but William Curtayne, senior analyst at Milford Asset Management, said it would require at least 170,000 retail investors to buy Meridian shares to match Mighty River's retail ownership.