First Meridian shares start trading

Meridian Energy’s instalment receipts have opened their first day on the New Zealand stock exchange at a premium to the issue price paid by retail investors.

Investors in the government privatisation float of 49% of Meridian shares [MELCA:NZX] paid $1 per share for their first instalment and at the listing the first recorded price was $1.08.

In all 1.25 billion shares were purchased in the IPO, with a final instalment of 50c per share due in 18 months time.

Initial turnover was strong with 42 million shares trading in the first five minutes. Meridian shares will also begin trading today on the Australian Stock Exchange at 2.30pm (NZT) under the ticker MEZCA.

"The early signs are reasonably good but there will be no doubt some people conscious of the price history for Mighty River Power," Martin Poulsen, head of wealth management at First NZ Capital told NBR Online.

The Meridian float raises $1.88 billion for the government, once all the shares are paid for, and is the second of three state owned electricity companies to be put up for partial sale following Mighty River in May.

About 62,000 New Zealand retail investors bought into the offer, compared to 113,000 who subscribed for Mighty River shares.

Demand may have been dampened by the performance of Mighty River, which opened today at $2.19, compared to its offer price of $2.50 and first day close of $2.62.

Mighty River's share price performance has been effected by the Labour-Greens policy to install a central buyer of power, effectively capping prices that could be charged for electricity.

"Given the uncertainty that still surrounds the electricity sector the [Meridian] price is probably a fair call," Rickey Ward, head of equities at Tyndall Investment Management, told Businessdesk.

"The changes that could occur under a Labour-Greens proposal, as well as Tiwai - the price has got some of those elements in it."

Meridian is New Zealand’s biggest power company, with seven hydroelectric dams and four wind farms generating about 30 percent of the country’s electricity needs. It also has a wind installation in Australia and another under construction.

The company had assets of $7.74 billion and recorded revenue of $2.7 billion in the 12 months through June.