Genesis to list with third-largest share register

16 April 2014 0 Comments

Genesis Energy will have the third-largest New Zealand share register on the NZX when it lists tomorrow, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

More than 68,000 retail investors have been allocated shares in the energy company’s initial public offering – the final IPO in the Government’s share offer programme.

The sale of 49 per cent of Genesis has raised $733 million for the Future Investment Fund, bringing the total proceeds from the share offer programme to $4.7 billion. That money is being spent on other public assets and infrastructure, particularly schools and hospitals, without the need to borrow overseas.

Keen interest in the Genesis offer means scaling has been required across all investor groups including institutions. A progressive scaling policy has been applied to the general offer as part of the Government’s commitment to put New Zealanders at the front of the queue for shares.

“This will see larger applications scaled more significantly than smaller applications,” Mr English says.

“The scaling policy effectively places a cap of approximately $5,000 on all general offer applications.”

“Due to demand in the general offer, the broker firm offer was reduced by 20 per cent, with these shares re-allocated to the general offer.”

At the time of listing, Genesis will be 88 per cent New Zealand-owned.

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Pre-Budget Speech to the Wellington Employers’ Chamber of Commerce

15 April 2014 0 Comments

Good afternoon. It’s a pleasure to be with you again today.

I would like to thank John and Raewyn and their team at the Wellington Employers’ Chamber of Commerce for inviting me to speak to you again this year.

I also want to acknowledge the Chamber’s work in promoting the Wellington business community and in grappling with issues affecting businesses in the capital city.

It’s great to see measures of business confidence in Wellington rising.

I recently attended the 20th anniversary of Infratil, a Wellington-based company built on managing airports and electricity companies better than governments can.

Infratil has exported its expertise to other markets and diversified to other businesses, creating more jobs in Wellington.

Many people are unaware that Meridian Energy’s head office is in Wellington.

Today the recently-floated company is valued at $4 billion and it could develop along a similar track to another large Wellington company, Todd Energy, by diversifying offshore and creating more jobs in Wellington.

Alongside burgeoning technology-driven companies, these companies are providing a firm foundation for Wellington’s economic success.

In exactly one month, I will present the National-led Government’s sixth Budget.

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Growth seen further lifting average wage by $7,500

15 April 2014 0 Comments

The average annual wage is expected to increase by $7,500 to around $62,200 a year by 2018 if New Zealand achieves its economic growth forecasts over the next four years, Finance Minister Bill English says.

This follows a $3,000 increase in the average wage to $54,700 a year over the past two years.

In a pre-Budget speech to the Wellington Employers’ Chamber of Commerce today, he notes that Treasury expects the economy to grow by between 2 per cent and 4 per cent a year out to 2018.

“Quarterly GDP or current account statistics are not, in themselves, what matter to families,” Mr English says. “Jobs, higher incomes and opportunities to get ahead are what really matter.

“Everyone’s situation is different and many families are still finding times are challenging. But the benefits of a sustainably growing economy are tangible and meaningful,” Mr English says.

Over the past two years, as economic momentum has picked up, the average full-time wage has increased from $51,700 a year to $54,700 a year – an increase of $3,000.

Looking ahead and based on its economic growth outlook, Treasury’s preliminary Budget forecasts show the average wage will rise to around $62,200 a year in four years’ time – an increase of a further $7,500 by 2018.

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Interest sought for new social bonds pilot

13 April 2014 0 Comments

A new and innovative alternative to the way social services are delivered has come a step closer, Minister of Finance Bill English and Health Minister Tony Ryall say.

The Government last year agreed to a social bonds pilot and people are now able to register their interest in becoming an intermediary in the pilot programme.

An intermediary is a person or group who brings investors and service providers together. The intermediary uses their skills in project management and finance to raise funds and drive performance to achieve agreed outcomes. 

“The Government does not have all the answers to our communities’ problems and social bonds are one new way to involve investors and private or not-for-profit organisations in improving social outcomes, while achieving value for taxpayers,” Mr English says. 

Mr Ryall says social bonds give service providers greater freedom and flexibility to use private capital and expertise to deliver services to their communities – with the Government paying a return depending on achievement of agreed outcomes.

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Interest sought for new social bonds pilot

13 April 2014 0 Comments

A new and innovative alternative to the way social services are delivered has come a step closer, Minister of Finance Bill English and Health Minister Tony Ryall say.

The Government last year agreed to a social bonds pilot and people are now able to register their interest in becoming an intermediary in the pilot programme.

An intermediary is a person or group who brings investors and service providers together. The intermediary uses their skills in project management and finance to raise funds and drive performance to achieve agreed outcomes. 

“The Government does not have all the answers to our communities’ problems and social bonds are one new way to involve investors and private or not-for-profit organisations in improving social outcomes, while achieving value for taxpayers,” Mr English says. 

Mr Ryall says social bonds give service providers greater freedom and flexibility to use private capital and expertise to deliver services to their communities – with the Government paying a return depending on achievement of agreed outcomes.

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Crown accounts confirm no room for spend up

08 April 2014 0 Comments

Another month of revenue running below forecast has again pushed up the deficit and reinforces the need for restraint in government spending, Finance Minister Bill English says.

“We remain committed to reaching surplus next year and Budget forecasts next month will confirm we are on track,” he says. “But today’s figures confirm what we have said repeatedly: It is a challenging task that will be achieved only if we remain disciplined.”

The Government’s financial statements for the eight months to 28 February  show the operating deficit before gains and losses at $1.4 billion, or $884 million more than expected, due mainly to lower than-forecast core Crown tax revenue.

Consistent with a growing economy, tax revenue was $1.9 billion (or 5 per cent) higher than at the same time last year – reflecting increases in source deductions, other persons’ tax and GST. However, tax revenue was $1.1 billion less than forecast in the Half-Year Update in December.

“While some of the variance is due to timing issues and is therefore likely to dissipate over coming months, corporate tax, GST, other individuals’ tax, source deductions and customs and excise duties were all below forecast,” Mr English says.

“These figures will be factored into next month’s Budget and reinforce the need for restraint in government spending. They also confirm that there will be no capacity for reckless spending promises ahead of the election later this year.”

Continuing strength in equity markets saw gains of $3.5 billion on financial instruments, which was $1.9 billion ahead of forecast. As a result, the Government’s operating surplus at $3.7 billion was $891 million higher than forecast.

IMF backs NZ’s economic, fiscal policy approach

01 April 2014 0 Comments

Confirmation from the International Monetary Fund that New Zealand’s growth prospects have improved and that its macro-economic framework remains sound is a welcome further endorsement of the Government’s economic programme, Finance Minister Bill English says.

As the IMF notes in its concluding statement issued today, New Zealand’s economic expansion is becoming increasingly embedded and broad-based. It forecasts annual economic growth will increase to about 3.5 per cent this year.

“It’s encouraging that the IMF has again noted that our macro-economic framework remains sound and provides policy space to respond to adverse shocks,” Mr English says

“In particular, it concludes the Government’s focus on returning to surplus next year will help to preserve its favourable standing with external creditors against New Zealand’s background of relatively high net foreign liabilities.

“I also agree with the IMF that New Zealand faces some risks, including globally from any downturn in the fortunes of China and the rest of Asia, and on the domestic front from issues around housing affordability.

“As the IMF notes, the Government’s steps to help alleviate housing supply bottlenecks and the Reserve Bank’s measures to tighten mortgage lending and to raise interest rates should help to ease house price pressures.

“The Government’s fiscal deficit reduction programme is also expected to take some pressure off the exchange rate, as the IMF acknowledges.

“So this latest report on New Zealand confirms we remain on the right track to build a faster-growing economy and to manage the global and domestic risks that might come our way,” Mr English says. “That’s important if we are to support more jobs and higher incomes for New Zealand families.”

Genesis shares priced at $1.55 – majority available to NZ retail investors

28 March 2014 0 Comments

New Zealanders have the opportunity to buy the majority of available Genesis Energy shares when the offer opens to retail investors tomorrow morning, after the successful completion of the bookbuild.

The Genesis shares have been priced at $1.55 each, meaning total proceeds from the offer will be up to $736 million. Already, $620 million has been committed through the bookbuild, which was the first stage of the share offer.

Based on the final price per share, the prospective 2015 financial year implied gross dividend yield is 14.3 per cent.

New Zealanders have been put at the front of the queue for shares. Up to 55 per cent of the Genesis share offer is expected to go to individual New Zealand retail investors - including loyalty bonus shares, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

“From tomorrow, New Zealanders can apply for these shares in three ways; via a sharebroker, online or by using the paper application form accompanying the Investment Statement,” Mr English says.

“To encourage New Zealand participation, New Zealanders who buy shares and hold them for 12 months in the same name from allotment date (expected to be 16 April 2014) will be eligible for one loyalty bonus share for every 15 shares they hold, with a cap of 2000 bonus shares,” Mr English says.

“At the final share offer price, Genesis will have an indicative market capitalisation of $1.55 billion,” Mr English says.

“We have again delivered on our New Zealand ownership commitment, with Genesis expected to be 88 per cent New Zealand owned when it lists on the NZX main board on 17 April. The Crown’s retained shareholding will be at least 51 per cent when the general offer closes on 11 April,” Mr English says.

Mr Ryall says the Government’s share offer programme has met every objective set by ministers.

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Up to 49 percent of Genesis for sale in share offer

26 March 2014 0 Comments

The Government today confirmed that up to 490 million shares - or 49 per cent of Genesis Energy - will be available for sale through the share offer.

400 million shares – or 40 per cent of the company - will be available through the bookbuild, which opens tomorrow. This is the first stage of the offer, involving local and international institutions and New Zealand sharebrokers, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

“Up to 90 million more shares – or 9 per cent - will then be available to New Zealanders through the general offer which opens on Saturday. This includes shares set aside for loyalty bonus share allocations to New Zealand retail investors and share allocations for participating iwi,” Mr English says.

“We have received positive feedback on the offer to date from local and international institutions and New Zealand sharebrokers.”

The Government has said previously that between 30 per cent and 49 per cent of Genesis Energy would be sold, depending on demand. It has also set an indicative price range of $1.35 to $1.65 per share – the final share offer price will be established through the bookbuild and announced on Friday.

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English to speak at Asian investment forum

24 March 2014 0 Comments

Finance Minister Bill English leaves for Hong Kong tonight, where he will deliver a keynote speech to a major annual Asian investment conference and meet a number of business and investment leaders.

“Hong Kong and the rest of China are significant and fast-growing trade and investment partners for New Zealand,” Mr English says.

“It’s important that we build on our profile in these markets and remind businesses and investors of the opportunities available our growing economy.”

Mr English will give a keynote speech to the annual Credit Suisse Asian investment conference on Wednesday, where he will outline the opportunities for New Zealand to lock in long-term gains from a number of improving economic indicators.

He will also meet Hong Kong Monetary Authority chief executive Norman Chan, along with New Zealand and Hong Kong business and investment leaders.

Mr English returns to New Zealand on Thursday.