Wide support for port re-float
Market keen on possible IPO for Auckland entity
Financial market participants have given the thumbs up for a possible initial public offer that would see Ports of Auckland re-floated.
No surprises there. The stock was a big hit with investors during its short time as a publicly-listed entity, even though just 20 per cent of the company was tradeable on the exchange.
Ports of Auckland kicked off on the NZX in October 1993 after an initial public offer (IPO) at $1.60 a share.
The Waikato Regional Council sold its shares through the IPO and Auckland Council continued to own about 80 per cent of the company when it was listed.
It delisted in July 2005 after a takeover offer from the council at $8 a share — a 24 per cent premium over its last traded price.
If history is anything to go by, it seems reasonable to assume that Ports of Auckland shares would be well-sought.
Investors need only look at the Port of Tauranga as a guide to what can be achieved with a mix of local authority and sharemarket ownerships.
Mixed model revisited
In response to a query from Stock Takes, the Port of Tauranga’s chief executive, Mark Cairns, said privatisation, partial or full, would be good for Ports of Auckland.
“But I want to stay out of this debate — it is ultimately a matter for Ports of Auckland’s shareholders to decide,” he said.
Cairns, who also sits on the board of Meridian Energy, said: “I am a big fan of the mixed-ownership model and I consider the government’s partial privatisation programme to have been a huge success.
“In most cases the government’s subsequent 51 per cent shareholdings — post listing — have pretty well ended up around the same value as their 100 per cent SOE shareholdings,” Cairns said.
“There has been greater capital discipline, improved dividend yields, and the process managed to raise around $4.7 billion in cash to invest in other much-needed infrastructure projects,” he said.
“Being a listed company certainly hasn’t hurt Port of Tauranga either, where we have grown from a $78 million company when listed in 1992, to now having a market capitalisation of around $2.9b and also having paid around $1.2b of dividends to shareholders over the same period,” Cairns said.
Cargo blues
The Port of Tauranga is 55 per cent owned by the Bay of Plenty Regional Council, with the balance in private hands.
The Herald has reported that an IPO for Ports of Auckland is being discussed in merchant banking circles, selling the operating company or part of the entire entity.
Auckland Mayor Phil Goff said he has had wide-ranging discussions but no specific proposal has been put forward.
In its last annual result, Ports of Auckland’s said its net profit after tax was $84m, up $21m on last year, but that container volumes had fallen by 6.7 per cent.
Globally, ports are being disrupted by a container industry that faces difficulties caused by ship construction outstripping trade growth, which has resulted in overcapacity and big losses for the major shipping lines.
Milkman
The sale by a2Milk chief executive Geoff Babidge of his remaining 600,000 fully-paid shares may have spooked the market somewhat.
Babidge cleared $2.1m, at an average price of $3.51 a share, from the sale of shares in the dairy company, according to a May 12 disclosure notice issued to the NZX.
The stock closed yesterday at $3.51, down from $3.80 just before the announcement.
In February, Babidge and chairman David Hearn, sold down their stakes after reporting that the company ‘s first-half profit had more than tripled as demand for its A2 Platinum infant formula surged in Australia, New Zealand and China.
At that time, Hearn sold 1 million shares for about $2.5 million, or $2.48 a share, while Babidge sold 900,000 shares for $2.2m, or an average price of $2.49.