The New Zealand government has given first-time investors an incentive to buy shares in Meridian Energy, by letting them pay for shares in two installments, while reaping the dividends in the period in between.
New Zealand Prime Minister John Key likened the initiative to an interest-free loan for investors.
Meridian will be floated on the New Zealand stock exchange in November, with investors able to pay for 60 per cent of their total shares up front and the remainder 18 months later. The government is seeking to raise around NZD3.2 billion (AUD2.79 billion) from the offering.
As a New Zealand state-owned electricity generator and retailer, Meridian Energy generates the largest proportion of the country’s electricity. The company generates electricity from renewable resources, including water and wind.
The announcement comes less than two weeks after the government announced an NZD30 million (approximately AUD26.12 million) subsidy to the Tiwai Point aluminum smelter – Meridian’s biggest customer – to keep the plant open for at least three more years, as reported by the Herald Sun.
Mr Key also announced the government is likely to sell down a third power company, Genesis, in early 2014. However, the New Zealand government has not yet set a date for selling shares of financially troubled Solid Energy or Air New Zealand.