GNE - Genesis Energy

[axe]

http://www.stuff.co.nz/business/industries/9758262/Genesis-Energy-will-be-the-last-asset-to-float-Key

Who is in???

[Snow Leopard]

Include me out.

Best Wishes
Paper Tiger

[couta1]

I'm in if they are giving them away, disc-Sad holder of MRP at IPO price:(

[Crow]

The hills are looking good. I better run there :scared:

[percy]

Chairman Rt. Hon Dame Jennifer Shipley.
That is enough for me.
Count me out too.!

[777]

WellI have done well out of MELCA by buying after the issue so hope to do the same with Genesis. I will though, buy a few in the float simply to show support for the decision to sell part of it.

[clip]

Definitely out!

[bohemian]

I think they will be signifantly discounted. Add to that is a reasonable punt that we will have a status quo Government in November. Thought the political risk was too great for the other two so I didnt bother but AIR has done well for me.

[silu]

Depends on the carrot.

[JimHickey]

If the price is right....

[Balance]

This is the wonderful thing about IPOs - the punters cannot get enough of it irrespective of how badly burnt they are from previous experience.

This has to be the one where punters finally strike pay dirt, right?

John Key cannot afford to have a bad one so close to the election, surely?

So roll up, roll up!

[Harvey Specter]

Fool me once, shame on you, fool me twice, same on me. Fool me three times????

May be in, lets wait till we see some details. They should panda to the Greens with a Convertable Note at a decent yeild. Force them to say they wont allow the note to convert.

[Toasty]

Its hard to get excited about this when there are so many other opportunities out there. I think the pricing will be somewhere between "Yay, we are successful" and "God , I hope we can get people interested again" and ultimately it will please no one.....

[Arbroath]

Fool me once, shame on you, fool me twice, same on me. Fool me three times????

May be in, lets wait till we see some details. They should panda to the Greens with a Convertable Note at a decent yeild. Force them to say they wont allow the note to convert.


How has anyone been fooled twice? MELCA cost $1 at IPO and have traded 89c to $1.12 from memory and today are $1.05 - how is that a disaster, or are too many people thinking they'll make 30% like a spec Tech IPO.

[horus1]

Never buy a share with an ex politician as a chairman. Been caught out to much and remember Mainzeal. I wonder if the prospectus will admit that loads are declining and solar is economic. Solar costs declining 20% per year and generator prices increasing , means more solar. Watch this govt try and block solar in the next year after the election.Dont touch it

[Harvey Specter]

How has anyone been fooled twice? MELCA cost $1 at IPO and have traded 89c to $1.12 from memory and today are $1.05 - how is that a disaster, or are too many people thinking they'll make 30% like a spec Tech IPO.Fair call but they did spend a while below their IPO price.


I wonder if the prospectus will admit that loads are declining and solar is economic. They will admit loads are falling, the previous two did. They will not admit Solar is economic because it isn't, not yet, not for households anyway (in part because of the need to still build the distribution network to handle peak loads which a home based, grid tied solar install doesn't mitigate).

[horus1]

Solar is clearly economic and battery costs are falling fast.

[Harvey Specter]

Solar is clearly economic and battery costs are falling fast.For some but not (yet) for the normal family house. If you want to talk about solar, we should move to another thread.

This supports the basis of my argument. If you have a contrary, reliable, independent source, post it to a new thread and we can discuss.

November 2013 Consumer Magazine reported: “The economics of grid-tied PV don’t stack up – particularly when you include the lack of significant environmental benefits. Our calculations show that most grid-tied PV systems have negative net present value (NPV), which means you’re better off putting your money in the bank.”

[Joshuatree]

Interesting that Vector are doing trials with Sun Genie solar with a storage battery(thanks karen). looks promising.

[Harvey Specter]

Interesting that Vector are doing trials with Sun Genie solar with a storage battery(thanks karen). looks promising.There scheme is interesting as the use of a high tech battery and high tech software is the next generation. They also have a vested interest in this high tech solution as by shifting the generation to the peak demand via the battery and software, there network investment is reduced (since they have to build in a contingency above peak demand, anything that reduces that peak demand, potentially reduces the need for investment).

[Harvey Specter]

And back to Genesis:

Bill English has announced (http://www.scoop.co.nz/stories/PA1402/S00373/new-structure-for-genesis-energy-share-offer.htm) key details:

The shares will be priced at the start of the offer period, rather than at the end as occurred with the previous share offers.
The Government expects to sell between 30 per cent and 49 per cent of the shares in Genesis.
The Government will offer a loyalty bonus scheme to eligible New Zealand retail investors

Also no shares will be offered to US institutions as it creates too much paperwork and hassles under US law.http://www.scoop.co.nz/stories/PA1402/S00373/new-structure-for-genesis-energy-share-offer.htm

[horus1]

Solar directly affects this sale.If volume drops Huntly closes retail price drops. I repeat this is a lemon. If you want a lecture on industry economics I can provide it.

[bmrm]

Waiting to see what the offer looks like. Didn't go for any of the others but I may well have a punt on this. The government wont want a disappointing final sale = possible bargain.

[Schrodinger]

Never buy a share with an ex politician as a chairman. Been caught out to much and remember Mainzeal. I wonder if the prospectus will admit that loads are declining and solar is economic. Solar costs declining 20% per year and generator prices increasing , means more solar. Watch this govt try and block solar in the next year after the election.Dont touch it

I feel warm and fuzzy inside knowing a school teacher and failed politician is steering this company. Good luck investors.

[Balance]

Will not even be a stag in this one as Treasury advises the government on new technique to maximise price - ie. institutions will get the shares they want as brokers (on behalf of clients) will bid same time as institutions.

Never known a broking house to put their own money on the line on behalf of clients.

Shudder!

[bull....]

wow its gonna be a real money maker this one lol esp since i just got a email to say my power prices are going up heaps

[winner69]

I hear they are getting cheaper and cheaper all the time

Now likely to be way less than $2 when people were talking about $3 bucks a while ago

[Harvey Specter]

13.5 - 16.5% gross yeild!!!!!

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11219035

[JimHickey]

that looks VERY cheap to me.

[NZSilver]

Not bad + bonus scheme 1 share per 15 owned after 1 years time.

[silu]

Suddenly quite tempted.

[Xerof]

I hear they are getting cheaper and cheaper all the time

Now likely to be way less than $2 when people were talking about $3 bucks a while ago

still effectively about $3 winner. They doubled the number of shares to 1 billion a few days ago, but even so, the yield range seems attractive.......

[winner69]

still effectively about $3 winner. They doubled the number of shares to 1 billion a few days ago, but even so, the yield range seems attractive.......

At least somebody on the ball

Must be a bargain at $1.35 odd .... certainly $3 sounds expensive ... and does Mum and Dad worry about the number of shares - of course not, its the price that matters .... and power companies getting cheaper by the day

[Joshuatree]

Bill England text to John. "its working like a charm John, they're jumping up and down with excitement already, we can set the price at the upper end for sure and when we publish the details i have a cunning plan; make the small print extra large ! .... they won't even read it!! lol:) Hook (MRP) Line (MEL) and Stinker Genesis :)."

[horus1]

The error is in the definition of forward load. Any line co will tell you it has been falling for a no of years .They have disguised that. Look at the figures for this year . Not Buying

[couta1]

I will be in on this one looks the best of the three to date,MRP was a waste of time for me at $2.50/share

[clip]

Re. the 15 bonus shares for every 1 held for 12 months, does anyone know if that would apply to people holding shares at end of 12 months, or only purchased on offer and held for the full 12? E.g. if I bought some shares 6 months in, and was holding them at the 12 months record date, would I receive the bonus shares?

After MRP/MEL I won't be touching this with a 10 ft pole on the initial offer

[winner69]

Re. the 15 bonus shares for every 1 held for 12 months, does anyone know if that would apply to people holding shares at end of 12 months, or only purchased on offer and held for the full 12? E.g. if I bought some shares 6 months in, and was holding them at the 12 months record date, would I receive the bonus shares?

After MRP/MEL I won't be touching this with a 10 ft pole on the initial offer


Pretty sure only applies to those bought through the initial offer

[silu]

Re. the 15 bonus shares for every 1 held for 12 months, does anyone know if that would apply to people holding shares at end of 12 months, or only purchased on offer and held for the full 12? E.g. if I bought some shares 6 months in, and was holding them at the 12 months record date, would I receive the bonus shares?

After MRP/MEL I won't be touching this with a 10 ft pole on the initial offer

Bonus Shares definetely only if you participate in the IPO. I'm sure I have 1k somewhere I could invest for giggles.

[RTM]

If it seems to good to be true...then it probably is ?
Chorus had a good dividend as well. What are the chances of this dividend being maintained I wonder ?



13.5 - 16.5% gross yeild!!!!!

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11219035

[Marilyn Munroe]

The error is in the definition of forward load.

horus1 what do you mean by 'forward load' and what is your opinion about the future trend for this?

Boop boop de do
Marilyn

[Harvey Specter]

If it seems to good to be true...then it probably is ?Yes - my exclamination marks can be read two ways:

- Great yeild - buy
- High yeild warning that there is something wrong.

Until we see how the market prices the shares, and therefore the yeild (ie. if the price doubles on listing, the yeild would sound about right), it is hard to tell, but one suggests that government wouldn't leave that much on the table so expect dividends to fall.

[horus1]

Forward load is the future volume of electricity being sold. it is declining per customer by about 2% per year and has been at that level for about 2 to 3 years. The retailers make most of there money of the domestic customers who are the ones with declining load. If you want to see what can happen look at EON a german generation company. The german s had cross subsidies for solar as did the AUstralians but declining costs of alternative electricity sources have meant the same thing will happen here but more slowly . I couldn't see these risks in the prospectus and the statement about the forward volumes was non specific.Bill English said loads were reducing after the Meridian float but shut up very quickly. This is only my opinion and I could be wrong.

[Tevita]

The following post on Cameron Slater`s blog today was in response to his blurb about a former Prime Minister promoting David Cunliffe`s lawyer wife opening her legal practice on a company basis recently. Whale Oil were drawing a parallel with accusations made about Minister Judith Collins compromising China visit. viz

"There must become if not already, a real conflict of interest when Cunliffe's wife handles the work for, "all but one of New Zealand's major electricity generators." With the Labour Greens power company regulation policy, surely there is a massive conflict?"

If that quoted statement is true does it have a bearing upon possible policy of a Green/Labour Government ?

[Harvey Specter]

What is the max amount of bonus shares you can earn?

is it 2000 or 2000/15=133 or about $200 worth? Hardly an incentive if the later which I think it is.

[vorno]

13.5 - 16.5% gross yeild!!!!!

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11219035

... do you *yield?!

[silu]

What is the max amount of bonus shares you can earn?

is it 2000 or 2000/15=133 or about $200 worth? Hardly an incentive if the later which I think it is.

Up to 2000 bonus shares. So if you want the maximum of bonus shares you have to apply for 30,000 shares.

[Harvey Specter]

Up to 2000 bonus shares. So if you want the maximum of bonus shares you have to apply for 30,000 shares.thats good. If I do invest it will be for between 2 - 30k shares so I wanted to ensure I would get the bonus on all.

I don't think I will read the IS this time till the price is set and the independent reports are out. Someone printed it at work today - it's a big read!

[percy]

I have changed my mind,and have expressed my interest to my broker.
Should I get them I can a least vote against "the chair's "re election when ever that happens!!! lol.

[Sgt Pepper]

I noted one commentator predicting a $3.00 + Share Price for Genesis by the end of the year, is this analysis realistic or just a throw away comment with no prospect/

[newtrader]

Any details on the scaling of shares through a broker firm (e.g. ANZ)?

Last time for Meridian, I recall the scaling was minimal (10%) for broker applications compared to general offer applications.

[couta1]

Anyone else want to kick there tv when they hear the Genesis ad come on?

What were they thinking?!?!
Yep she's certainly overdone probably to try and make those of us who bought MRP at IPO price look at this one as being different and tempt them to leave those burns behind and have another go,actually did Derek Handley have anything to do with those adds?:cool: Seriously though this offer could yet be the pick of the 3?

[Joshuatree]

Well this screwed dad is up 8% with a 4.19c div to come with MEL, get it right screwless antler less; mooch:scared::t_up:

[percy]

Well this screwed dad is up 8% with a 4.19c div to come with MEL, get it right screwless antler less; mooch:scared::t_up:

Classic Joshuatree. Wonderful stuff.!! lol.

[K1W1G0LD]

I think they screwed the mums and pops the first time with MRP, then let down the savvy younger investors with MELCA, so now they're targetting the 3-10 year old bracket with these ads since they're the only ones left with money!

Careful now, with a handle like moosie , you could be in that 3-10 year old bracket!!

[Joshuatree]

Net debt re $994 million int rates going up, resets , cost of loans on the rise.

[Harvey Specter]

In comparison to the other recent government IPO'S they have announced a big range in share pricing 23% difference from the bottom to the top.
They wont tell us how much of a % of the company they are selling either.Re the price range, they could give a wider range as it will be set in stone before any applications are made by the public. THat is completely fair.
It will be interesting to see if they also announce what % will be sold prior to the applications opening. I dont think they will but they should at least give a narrower range.

[Whipmoney]

Does anybody think that given the relatively high dividend yield we should see some big international investors look to jump into this one thereby bidding up the price and driving the yield down.

From my understanding it has an impressive yield due to the blend between its core business and the returns from the kupe gas field. Obviously Kupe only has a finite supply of gas (say 5 years) however this is a long-time in the high returning seeking investment world.

[JimHickey]

How do the bonus shares work from the companies point of view? Do they just issue more shares (this would dilute the govts holding) or do they hold them back in the IPO?

[Harvey Specter]

How do the bonus shares work from the companies point of view? Do they just issue more shares (this would dilute the govts holding) or do they hold them back in the IPO?
The company is not issuing any shares. It is the government doing the selling (ie. it is a shareholder IPO, not a company IPO). no new capital is being raised for the company.

The government will hold back share for it.

[iceman]

Does anyone know what the payment date is for these shares in the IPO ? Can't seem to find that info

[Harvey Specter]

Does anyone know what the payment date is for these shares in the IPO ? Can't seem to find that infohave you looked in the prospectus. Normally timetable is in he first 20 pages

[Xerof]

Page 4

general 11 April
firm brokers 14 April

[iceman]

have you looked in the prospectus. Normally timetable is in he first 20 pages

Sadly no postal deliveries to Drake Passage (Cape Horn) and internet too slow to download large files :t_down:

Thanks Xerof for the info.

[silu]

Chalkie's column about Genesis
http://www.stuff.co.nz/business/opinion-analysis/9841985/Genesis-float-may-provide-right-music

[Te Whetu]

I'm not sure if I'll buy in. I've done a back-of-the-envelope valuation which sets a price of $1.43 pre-bonus shares.

Estimate of normalised EBITDAF (excluding Kupe): $230 million
Estimated EBITDAF multiple for electricity assets: 8.2x

Weighted share of 2P reserves at Kupe: ~62 mmboe x 31% = 19.2 mmboe
Estimated 2P reserves multiple for Kupe: $28 per boe

Enterprise value: $2,424 million
Net debt: $994 million
Equity value: $1,430 million

Number of shares: 1,000 million
My rough estimate of share value: $1.43 per share.

Factoring the 1:15 bonus share: ($1.43 x 16 less c.14 cents of dividends not received on bonus share) / 15 = $1.51

Offer share price which gives nil NPV: $1.51 per share

Notwithstanding the above, I suspect Genesis could priced based on electricity multiples being applied to all its earnings (i.e. without taking into account that Kupe contributed one third of EBITDAF in FY13).

Anyone have any thoughts on the above analysis, and in particular on my assumptions three key assumptions (EBITDAF, EBITDAF multiple, 2P reserves multiple)?

Disclaimer: The above analysis is rough and for the purposes of discussion on these forums only. Please do not rely upon it make an investment decision.

[stones]

Sounds convincing and the proof will be as they say in the pudding. I will however be taking up a small holding as I feel this share offer has some appeal after reading the prospectus.

[TideMan]

Is there any advantage of buying these shares through a broker over applying for them directly online?

[Joshuatree]

Not costwise, easier with a broker if you have one (and a FIN number) and he will appreciate it as they get a fee from Genesis ;so may be biased re advice.

[bung5]

Chalkie's column about Genesis
http://www.stuff.co.nz/business/opinion-analysis/9841985/Genesis-float-may-provide-right-music

Something very wrong about Chalkie's maths..

"BUT wait, there's more. Genesis investors who hold for a year get one bonus share for every 15 they bought, up to a maximum of 2000.
So an investor buying up to 30,000 shares, or $40,500 to $49,500 worth, gets a 6.7 per cent bonus in April next year.
The bonus for Mighty River shareholders was one share for every 25 held for two years, up to a maximum of 200. That's a 4 per cent bonus after a longer holding period for shareholders buying up to $12,500 worth at the $2.50 offer price"


2000 shares.... yet he uses 30,000 shares in the calc ???????!

[Joshuatree]

BUY Genesis Energy
Genesis Energy - widely considered the “ugly duckling” of the power companies - may actually be the only one worth serious consideration as an investment.
The unsuccessful floats of Mighty River Power and Meridian Energy has led the government to seek a lower price - offering investors better value and a “more favourable experience” - on this smaller float.
Genesis Energy also has a less risky business structure, generating electricity from a mix of hydro, wind, gas and coal stations. The earlier floats were too dependent upon cheap hydroelectric stations but in a dry year would need to buy electricity on the wholesale market when prices were high to meet (fixed price) demand from their consumers - significantly depressing profitability. In this same situation, Genesis Energy should be able to meet all of its consumers needs by increasing gas and coal power generation - and selling some of that to the other companies at high wholesale prices. This is a more stable spread of assets that should produce more stable earnings and cashflows.
Genesis Energy also owns 31% of the Kupe joint venture which contributes about one-third of its earnings.
The NZ Government is seeking to sell 30-49% of Genesis Energy. That is 300-490 million shares at a price to be set between 135 and 165 cents per share, raising between $405-809 million. This is less than Mighty River ($1700 million) or Meridian Energy ($2000 million) and a last opportunity for a “successful” float (i.e. the last chance to under-price a relatively small float to give investors a favourable experience).
One company has valued Genesis Energy shares at 325-350 cents per share. That may be more than a little optimistic, but these shares do look under-valued at 135-165 cents.
Investors who buy in the IPO and hold for a year will also receive 1 bonus share for every 15 shares (up to a maximum of 2000 bonus shares), effectively lowering the issue price to 126½-155 cents.
Genesis Energy earned revenues of $2264.8 million in the year to June 2012, with a net profit of $86.4 million. Revenues fell 8.6% to $2070.2 million in 2013, but profits increased 20.9% to $104.5 million.
Revenues for the current year to June 2014 are forecast to decline 1.4% to $2040.6 million with net profits down 60.0% to $41.8 million (4.2 cents per share) and will pay an annual dividend rate of 12.8 cents (i.e. a 6.4 cents interim dividend already paid and a forecast final dividend of 6.4 cents).
In the year to June 2015, revenues are forecast to rise 6.1% to $2165.9 million and profits to recover 128% to $95.4 million (9.5 cents per share). An annual dividend rate of 16.0 cents is predicted.
Like the other power generators, Genesis Energy generates high cashflows, so will pay dividends that exceed its reported net profits. The 2014 dividend will distribute 84% of “free cash flows” (or 306% of net profits) and the 2015 dividend 85% of “free cash flows” (and 168% of profits).
With imputation tax credits that offers a current gross Dividend Yield of 10.8% (at an issue price of 165 cents) or 13.2% (at 135 cents). The 2015 forecast dividend offers a gross Dividend Yield of 13.5-16.5%.
So what are the downsides?
Firstly, this is a no-growth business. The company is able to pay high dividends as the electricity market is not expected to grow in the foreseeable future. So there is no current need to re-invest in new power stations. If that becomes necessary in the future, then the company would need to significantly reduce dividends and/or raise new equity and/or debt capital.
Secondly, Genesis Energy's 31% interest in the $1300 million Kupe joint venture is (like all oil and gas resources) a depleting asset. It currently provides strong cash flows (to pay dividends) but in 10-15 years these cashflows will decline sharply. Replacing that resource would require a very large capital investment in exploration and development.
Thirdly, like all power generators, the company owns and/or relies upon large infrastructure assets subject to “catastrophic events” (i.e. earthquake, volcanic eruption or other disasters). Damage to Kupe infrastructure or the Maui pipeline would disrupt gas supplies to its Huntly Power station and its ability to generate electricity.
Fourthly, there are political risks: Treaty of Waitangi claims could increase costs of water and geothermal resources, reducing operating margins. Claims could also require the return of land used in the business but “the compensation paid to the company may not be sufficient to cover the full extent of the losses incurred”. Government actions, such as a “carbon” tax could also lower operating margins. Higher transmission charges would transfer profits from the power generators to Transpower NZ (100% government owned).

Summary and Recommendation

Buy Genesis Energy shares!
At 135-165 cents, Genesis Energy shares do appear under-valued - offering a 2015 gross Dividend Yield of 13.5-16.5% - so we would expect to see the shares re-rated over the next few years. That will produce a high income yield andcapital appreciation for investors.
We do have concerns longer term. This is a no-growth business and, in fact, profits and dividends could drop in 10-15 years as the Kupe profits and cashflows run dry.

[bung5]

Oh you saying you can receive 2000 bonus shares?? I was thinking you only receive bonus shares on a maximum of 2000 held.

[macduffy]

Hi, Joshuatree.

Is that your analysis and recommendation of the Genesis float? Or whose?

Cheers

[Snow Leopard]

In addition to a fixed price, New Zealand retail investors will also receive one Loyalty Bonus Share for every 15 Shares purchased during the Share Offer, up to a maximum of 2,000 Loyalty Bonus Shares. These Loyalty Bonus Shares will be available to eligible New Zealand Applicants who hold their Shares in the same registered name for 12 months.


from the Letter from the Crown in the Investment Statement - in several other places as well.

Best Wishes
Paper Tiger

[Joshuatree]

Its a paid sub so I'm being discreet. Something like M***** A******* cheers JT

[macduffy]

Thanks, JT.

Here's another (broker's) view:

http://www.stuff.co.nz/business/industries/9860382/A-brokers-view-Genesis-Energy

[Beagle]

Watching this. I like the spread of generation assets and gross dividend and bonus share scheme is attractive notwithstanding the eventual run-down of Kupe's reserves. I like the fact that the price will be known before one is asked to invest, (finally they got this right).
Might have a modest crack at this to boost average portfolio dividend yield.

[couta1]

I've studied this one enough and with National looking sure to be returned and Kupe good for a long time yet im going for max allocation needed to obtain 2000 bonus shares so around 30k shares,Im picking around a 10% scaling being applied

[Harvey Specter]

I've studied this one enough and with National looking sure to be returned and Kupe good for a long time yet im going for max allocation needed to obtain 2000 bonus shares so around 30k shares,Im picking around a 10% scaling being applied
Applying through the public pool or the broker pool? I think last time, the broker pool has lower scaling?

I think I will throw in about $10k which is a fairly standard first investment for me.

[couta1]

Applying through the public pool or the broker pool? I think last time, the broker pool has lower scaling?

I think I will throw in about $10k which is a fairly standard first investment for me.
Broker pool,scaling the same for both technically but you get to ask for a firm allocation through the broker so yes probably more chance of getting what you ask for

[Omega]

Went thru my broker as felt there was little chance of getting a meaningful parcel in the public pool. My understanding is that the maximum scaling thru the brokers will be 20% whereas scaling in the public pool is unlimited but obviously all depends on the final price and subsequent demand on the public pool.

[RTM]

Trying to figure out whether to buy some of these or now. Taking a look at the PE Ratios. Hopefully table attached.

5626
What causes the huge drop for Genesis between 2014 and 2015 ?
I am not an accountant....so am unsure what this means.

Thanks for any info.
RTM

[Harvey Specter]

Trying to figure out whether to buy some of these or now. Taking a look at the PE Ratios. Hopefully table attached.

5626
What causes the huge drop for Genesis between 2014 and 2015 ?
I am not an accountant....so am unsure what this means.

Thanks for any info.
RTMI dont know but the companies aren't identical so a direct comparison isn't possible. GEN has great cashflow from Kupi, hence the high dividends, but this income stream will run out in 15 or so years.

Have yet to do my research yet.

[couta1]

I dont know but the companies aren't identical so a direct comparison isn't possible. GEN has great cashflow from Kupi, hence the high dividends, but this income stream will run out in 15 or so years.

Have yet to do my research yet.
15 years is a long time,why not run with the money in the meantime?

[Harvey Specter]

15 years is a long time,why not run with the money in the meantime?Agree - I'm just saying it distorts the comparison.

[horus1]

The revenue estimates for Genesis look to be very optimistic to me,thats why the PE comes down.

[Joshuatree]

Maybe treat it like a bank bond paying well above mkt int rate. What rating would it get AA-Labour=? with a 6% rise reset in one year.

[couta1]

The Genesis sale is different to the previous asset sales, with institutional investors and sharebrokers competing for up to 400 million shares - 40 per cent of the company - ahead of retail investors.

The retail offer, where retail investors will buy shares, opens at 12.01am on Saturday. Retail investors will be offered up to 90 million shares, although about 15 million of these have been set aside for the loyalty bonuses.

Retail investors will be offered one bonus shares for every 15 they already own for one year.

Huh? Poor reporting? ... So if you buy through your broker - Are you a retail investor or not? Instos don't get the bonus shares??
Anyone applying through a broker or the public pool who is a NZ applicant will get the bonus shares if they hold for a year or more,this would also include kiwis living overseas I'd say

[Joshuatree]

Pretty sure any investor who holds for a year gets the 1 for 15 whether retail , wholesale, wholemeal, sunny side up or shaken not stirred!!:p

[Harvey Specter]

Poor reporting? Yes
Some responses dont need 10 characters!

[Omega]

I've studied this one enough and with National looking sure to be returned and Kupe good for a long time yet im going for max allocation needed to obtain 2000 bonus shares so around 30k shares,Im picking around a 10% scaling being applied

The 30k shares for max 2000 bonus shares is an optimum strategy but if 2,500 like minded followers adopt the same strategy this will drain the public pool!

[Beagle]

One thing that bugs me with this offer. There's a big lift in the forcasted profit for 2015 compared to 2014.
When they start talking about weather patterns returning to normal, (read a cooler winter) as the basis for a 4%+ increase in generation, one can only imagine that there are other generators out there with spare capacity hoping for the same thing.
Counting on high dividends based on weather normalisation when some would argue climate change, (global warming in old fashioned speak), is with us to stay....hmmm...

Then there's the matter of whether those in charge of corporate governance are there based on their corproate skills or something else...

[skid]

Filled out the form last night and it said it would send something to my email shortly but nothing yet(24hrs) Has anyone else experienced this or have you received confirmation quickly.

It was through direct broking

[couta1]

The 30k shares for max 2000 bonus shares is an optimum strategy but if 2,500 like minded followers adopt the same strategy this will drain the public pool!
Ive got a firm allocation through DB not the public pool,not quite sure what your trying to say here,that you think ones like myself shouldn't be so greedy?

[troyvdh]

Giday C...how did you manage that.Ive spoken to them a few times and they would not give me a firm allocation.Cheers

[couta1]

Giday C...how did you manage that.Ive spoken to them a few times and they would not give me a firm allocation.Cheers
Replied to your pm troy

[Omega]

Ive got a firm allocation through DB not the public pool,not quite sure what your trying to say here,that you think ones like myself shouldn't be so greedy?

Not at all, that would be hypocritical of me. I was simply highlighting that it would only take 2,500 applications of 30,000 shares to fill the public pool which I think is too small and could be subject to material scaling. I also went thru my broker for this very reason.

[couta1]

Not at all, that would be hypocritical of me. I was simply highlighting that it would only take 2,500 applications of 30,000 shares to fill the public pool which I think is too small and could be subject to material scaling. I also went thru my broker for this very reason.
No probs,I think the public pool applications will generally be for small parcels like around 5k shares average IMHO

[percy]

Not sure of my facts,however, I think should you receive a broker's "firm allocation" you can also apply for shares in the public pool.
I hear broker's expect to scale clients allocations.

[couta1]

Couta, would you mind sharing with us all how you got a firm allocation through DB? Or PM me the details if you prefer? I'm wondering if it may be the best option for me. Cheers.
T the firm allocation is still subject to the scaling rule depending on the level of oversubscription as is the public pool,we don't know what % that could be but I'm guessing around 10%,give the wholesale section at DB a call and tell them how many shares you want allowing for scaling and ask for a firm allocation from them for that number,Percy is correct in that you can apply for shares under both pools and if fact I'm thinking of doing this to ensure I get what I want in case of heavy scaling,you could sell any excess on market and there's bound to be a spike in the price initially

[percy]

T the firm allocation is still subject to the scaling rule depending on the level of oversubscription as is the public pool,we don't know what % that could be but I'm guessing around 10%,give the wholesale section at DB a call and tell them how many shares you want allowing for scaling and ask for a firm allocation from them for that number,Percy is correct in that you can apply for shares under both pools and if fact I'm thinking of doing this to ensure I get what I want in case of heavy scaling,you could sell any excess on market and there's bound to be a spike in the price initially

My wife and myself have been scaled 25% already by my broker at Craigs.In fact he was not impressed that I rang to increase the amount we wanted to put in!!!!.

[Xerof]

I think you'll be 'looked after' couta, but there is one step yet to be taken, and that is the bookbuild. If a brokers bid is way off the pace, they could be severely scaled or miss entirely. Unlikely for smaller guys like DB who will probably submit a volume only bid, with acceptance of the set price, but there are three scaling events:

the bookbuild, from which the broker bid may be scaled at the outset,
the brokers internal client scaling, if the broker got less than sought at step one,
then, the Crown still has the right to scale the 'firm' allocations, at their discretion

[troyvdh]

Big picture here guys...I hope you guys are not "staging' this issue Im not a socialist by any means but I hope that folk are not deluged with headlines stating %20 gains on this IPO....like how would that go down with folk trying to reconcile there future investment intentions i.e. residential properties vs the productive and beneficial Sharemarket when it appears that those who can can make a fortune overnight...because they can....this is nuts...Am I being unreasonable...

[percy]

I think you'll be 'looked after' couta, but there is one step yet to be taken, and that is the bookbuild. If a brokers bid is way off the pace, they could be severely scaled or miss entirely. Unlikely for smaller guys like DB who will probably submit a volume only bid, with acceptance of the set price, but there are three scaling events:

the bookbuild, from which the broker bid may be scaled at the outset,
the brokers internal client scaling, if the broker got less than sought at step one,
then, the Crown still has the right to scale the 'firm' allocations, at their discretion

Thank you for your post.

[Kojak]

Filled out the form last night and it said it would send something to my email shortly but nothing yet(24hrs) Has anyone else experienced this or have you received confirmation quickly.

It was through direct broking

Yes, I filled out their online form last week and haven't heard anything yet

[percy]

Big picture here guys...I hope you guys are not "staging' this issue Im not a socialist by any means but I hope that folk are not deluged with headlines stating %20 gains on this IPO....like how would that go down with folk trying to reconcile there future investment intentions i.e. residential properties vs the productive and beneficial Sharemarket when it appears that those who can can make a fortune overnight...because they can....this is nuts...Am I being unreasonable...

Offcourse the big picture for me is looking forward to voting against Mrs Shipley's re-election whenever that comes up.!!!
I also think it will be a very safe investment,and the dividends will be double what I am earning on bank deposit.
Not looking to make a fortune overnight,just get a good return on the present fortune?!

[Xerof]

my sentiments exactly percy, on all counts. This is not very likely to be a stag IPO, remember everyone called it a dog. A dog doesn't have antlers.

unfortunately, the Crown still have 51% of the votes for chairman.........but we can at least register our feelings

percy, I'm genuinely surprised you have already heard your allocation, as in theory the book build hasn't even closed yet (I think, you've got me wondering now)

and I pick the price to be 1.55

[bohemian]

My wife and I share your sentiment Percy and will relish the prospect of voting Mrs Shipley out.

[RTM]

I have some Chorus shares to help my dividend return. That didn't work. Not to many so no damage done. But a bit of a lesson in what the regulatory/political world can inflict on us. In spite of this lesson...I have backed all the floats. Maybe it is misplaced parochialism.

Good luck to us all. As Snoopy says (See MRP) we have an opportunity in September to address who we think we should hold to account.


Offcourse the big picture for me is looking forward to voting against Mrs Shipley's re-election whenever that comes up.!!!
I also think it will be a very safe investment,and the dividends will be double what I am earning on bank deposit.
Not looking to make a fortune overnight,just get a good return on the present fortune?!

[percy]

my sentiments exactly percy, on all counts. This is not very likely to be a stag IPO, remember everyone called it a dog. A dog doesn't have antlers.

unfortunately, the Crown still have 51% of the votes for chairman.........but we can at least register our feelings

percy, I'm genuinely surprised you have already heard your allocation, as in theory the book build hasn't even closed yet (I think, you've got me wondering now)

and I pick the price to be 1.55

My allocation is not really "firm" at present."Firmish" maybe the best way to describe it at this early stage.!

[airedale]

Hi Percy, and others, I find it intriguing that just as the GEN float is here then the other two power companies {MELCA and MRP} which have so far been lacklustre are now starting to shine brighter than before.
What is the message? Buy more GEN after the initial euphoria?

[percy]

Hi Percy, and others, I find it intriguing that just as the GEN float is here then the other two power companies {MELCA and MRP} which have so far been lacklustre are now starting to shine brighter than before.
What is the message? Buy more GEN after the initial euphoria?

Hi Airedale,
I think it is because David Cunliffe is the wrong person to be Labour's leader.
Therefore the chances of seeing Labour/Greens' single buyer of power model is remote.

[Harvey Specter]

I think it is because David Cunliffe is the wrong person to be Labour's leader.
Therefore the chances of seeing Labour/Greens' single buyer of power is remote.Bingo. .

[ScrappyO]

Just heard its 1.55 on news.

[Master98]

final IPO price set at $1.55

[JBmurc]

Just heard its 1.55 on news.

Right well hope to get them cheaper when I go to buy anyone know likely first divie payment date ?

[troyvdh]

Dear JB..how do you intend to do that and why...cheers

[shonen knife]

If the dividend is really going to be 14.3% every year, then how does it make any sense for the government to be selling this? According to http://www.stuff.co.nz/business/industries/9880550/Govt-sets-Genesis-share-price, selling at $1.55 raises them $736 million and the “The brokerage, legal and PR fees run into well over $100 million." , so that means they will make around $600 million from the sale which they would have made in 6 years via dividends ($736 * 14.3% = $105 mil, so 6 years to make back the 600 mil that they will actually get). But that is probably just my flawed view/calculation.

[troyvdh]

Dear shonen...did you include the 1 for 15...after what a year.../...is that about 6% also.....go for it...

[shonen knife]

Dear shonen...did you include the 1 for 15...after what a year.../...is that about 6% also.....go for it...

lol, not sure if that was included in the 14% from the article (I assume not), either way their has got to be some catch to this. I am very interested in this offer, but guess I will need to do my homework this weekend.

[milt1968]

How do you all feel about the price of 1.55? Undervalued? T

[troyvdh]

I stand to be corrected..but isn't the SP totally and utterly nonsensical...again I stand to be corrected....

you have an asset worth $100...2 shares are $50....ten shares are $10.....whats the difference....

I really hope to be corrected...

maybe not nonsensical but Im sure you lot get my drift

[RRR]

Damn, too late to get "firm allocation" from broker! I can't believe that retail allocation through general offer is only 9%!

[JBmurc]

Dear JB..how do you intend to do that and why...cheers

Hope to get them ...."hope" .......If I had the funds now I'd be happy to buy 200k at the IPO

[couta1]

Damn, too late to get "firm allocation" from broker! I can't believe that retail allocation through general offer is only 9%!
Why is it too late,the price has just been set and its the weekend so no action from brokers until Monday at earliest?

[Omega]

I stand to be corrected, but I understood the book build worked like the market close in that you bid your qty/price thru your broker and therefore if your bid price was 1.55 or more, you would be assured of getting them subject to any scaling. Those that didn’t place an order or bid $1.54 or less will have missed out and will need to go thru the public pool unless brokers were permitted to place bids in excess of their client orders.

[Xerof]

and I pick the price to be 1.55

good, that's a fair price to all concerned - 49% of a dog sold at near top of range - I happily pick up a few to sit on for a few years as a yield play. I see pumpkin head Cosgrove has come out with his usual commentary, yawn....followed by the horsetralian...yawn again

thats it for asset sales - no more to come - end of story I would have thought

[Sgt Pepper]

what about Kiwibank, do you think there is any prospect of its sale in Nationals third term?

[kyanar]

Unlikely, they have said time and again they have no intention of selling Kiwibank - and also that Genesis was the last in the program. Too much risk of public backlash.

[tosspot]

Just had a read through and seems to be better than the other 2. im really thinking this could be a good stag. cheeky little 10 odd % for a few minutes work

[stones]

good, that's a fair price to all concerned - 49% of a dog sold at near top of range - I happily pick up a few to sit on for a few years as a yield play. I see pumpkin head Cosgrove has come out with his usual commentary, yawn....followed by the horsetralian...yawn again

thats it for asset sales - no more to come - end of story I would have thought

Im in. Should a good long termer. As for Cosgrove etc has anyone ever told him how boring he sounds? His comments are not as smart as a 10th grader!!

[Jim]

Im in. Should a good long termer. As for Cosgrove etc has anyone ever told him how boring he sounds? His comments are not as smart as a 10th grader!!

Someone with half brain can think better than him

[peat]

I haven't read the whole thread, or the whole prospectus yet, but again, (ref other generation IPO's) there seems to be an emphasis on high yield provided by high cash flow with a concerning low earnings.
Aren't you actually paying $1.55 for $0.042 ?
5637

[Joshuatree]

Thanks, JT.

Here's another (broker's) view:

http://www.stuff.co.nz/business/industries/9860382/A-brokers-view-Genesis-Energy

Thanks mac. Hey i know there is more research out there besides what me and macduffy have found ; haven't found it yet. If you've got some can you post it for all to see? Thanks in advance. My broker hounding me today re how many I would like.

[Joshuatree]

Had a look at NZX website again and found under "independent research reports" 5 reports but they haven't been activated yet

[BlackPeter]

I haven't read the whole thread, or the whole prospectus yet, but again, (ref other generation IPO's) there seems to be an emphasis on high yield provided by high cash flow with a concerning low earnings.
Aren't you actually paying $1.55 for $0.042 ?


Had a quick look into the offer as well and agree. According to the official numbers (check: https://d.genesisenergyshares.govt.nz/investment-statement/viewer/004/#p=3&c=0&v=1) do they offer (apart from the one off bribe of 1 in 15 bonus shares) a company with a quite high P/E and not particularly attractive long term perspectives. The gas will run out over time and electricity generation prices are for some time unlikely to rise. In addition to that has Genesis the most unattractive mix of power plants of all (big) power companies in NZ (coal and gas fired vs renewables).

Will stay clear of this offer - feel free to pick up my allocation. Did a quick on the back of an envelope calculation - the shares start getting interesting if & when they drop below $1.30. I am happy to wait for that und invest my money until this point in time into more promising ventures :D

[vorno]

Had a quick look into the offer as well and agree. According to the official numbers (check: https://d.genesisenergyshares.govt.nz/investment-statement/viewer/004/#p=3&c=0&v=1) do they offer (apart from the one off bribe of 1 in 15 bonus shares) a company with a quite high P/E and not particularly attractive long term perspectives. The gas will run out over time and electricity generation prices are for some time unlikely to rise. In addition to that has Genesis the most unattractive mix of power plants of all (big) power companies in NZ (coal and gas fired vs renewables).

Will stay clear of this offer - feel free to pick up my allocation. Did a quick on the back of an envelope calculation - the shares start getting interesting if & when they drop below $1.30. I am happy to wait for that und invest my money until this point in time into more promising ventures :D


...there could be potential gain for the short-term - once they hit market I reckon they'll follow the same initial route as the other IPOs; raise by 10% within a day or 2 then plummet to 10-15% of issue price.
But, one cannot guarantee that!

[Master98]

...there could be potential gain for the short-term - once they hit market I reckon they'll follow the same initial route as the other IPOs; raise by 10% within a day or 2 then plummet to 10-15% of issue price.
But, one cannot guarantee that!

personly think this will depend on the following political polls, if NATS continuing leading then we will see all power co. share rising. Kupe gas and oil field still have another 10-15 years life left.

[horus1]

^The p.e is VERY HIGH and the electricity volumes are declining all over the countryby about 1% per year . This years p.e. is above 30. Stag it.

[couta1]

^The p.e is VERY HIGH and the electricity volumes are declining all over the countryby about 1% per year . This years p.e. is above 30. Stag it.
Rough calculation if you obtain 30k shares in order to obtain 2k max bonus shares, 30k x 1.55 =46500x14.3%=6649.5 gross dividend plus 2k bonus shares at 1.55 =3100 Total =9749.5 Gross profit if you sell after a year, Of course could be significantly more if shares are worth $2 in a years time which is quite possible,your 30 k shares will then be worth an extra 13500 at $2 plus bonus shares plus dividend basically an extra 27k at $2 all up,Why stag it,just hold for a year

[Arbroath]

Breakeven after 1 year is approx $1.35 taking into account net forecast dividend and bonus shares issued. Seems like they are putting lipstick on a pig but basically from issue price you can lose 13% over a year and be square (apart from the holding/opportunity cost).

Of course Mighty River Power is still behind by about 12-13% approaching a year on the boards but we've had 2 dividends totalling a net 8.3cps and it is hard to see this being more of a disaster than what happened with MRP. At if National win the election Genesis might be one of the best 12-month returns on the NZX with the dividend and bonus shares.

IS this the worst of the big energy companies but the best 1-year investment?


Rough calculation if you obtain 30k shares in order to obtain 2k max bonus shares, 30k x 1.55 =46500x14.3%=6649.5 gross dividend plus 2k bonus shares at 1.55 =3100 Total =9749.5 Gross profit if you sell after a year, Of course could be significantly more if shares are worth $2 in a years time which is quite possible,your 30 k shares will then be worth an extra 13500 at $2 plus bonus shares plus dividend basically an extra 27k at $2 all up,Why stag it,just hold for a year

[Joshuatree]

Research Reports are now available on NZX . Am relieved as my broker is pushing for a commitment re how many if any i want. Needing more income i am favouring the idea but for now its reading the research. Thanks for peoples thoughts .

[Harvey Specter]

5 reports avaliable on the NZX site. Looks like all say buy with Morningstar being the most conservative with a $1.60 price

[couta1]

Asked for 55k worth have obtained firm allocation of 50k so will get max bonus shares,Happy:cool:

[Joshuatree]

And two highest $1.97

[axe]

Asked for 55k worth have obtained firm allocation of 50k so will get max bonus shares,Happy:cool:


Well done and Good luck. I hope they do not disappoint. :)

[milt1968]

Where on the NZX website are the Research Reports? Thanks

[axe]

https://www.nzx.com/genesis-research

[Joshuatree]

EPS from 3 Analysts 2013 8.1 c, 10.5c , 9c 2014 4.6c , 8.7c , 5c 2015 9.1c , 10.3c ,10c 2016 10.5c , 8.6c

[couta1]

Umm ... The bonus share is already built into the price.
Still if you wait a year get your bonus shares and sell your total holding for $1.55 or above my calcs stand

[fish]

Looks like demand is very strong-asb is limiting allocations to 50% of indicative.

[brend]

Looks like demand is very strong-asb is limiting allocations to 50% of indicative.


ASB is part of the 40% allotted shares?

[NOCASH]

Looks like demand is very strong-asb is limiting allocations to 50% of indicative.


Are you sure? express my interest with Direct Broking i asked for 35,000 ($55,000) shares, firmed allocation of 33,800 ($52,390).

I am going to stag the shares.

[RTM]

Cynical election bribe?

Whatever it takes Belgarion.

[newtrader]

How does one (with a ASB share trading account) request/apply for a firm allocation? Do they call them up? Or apply via the official Genesis website?

[brend]

You should've got an email from ASB today. I clicked on the link and it auto picked up ASB securities.

[bull....]

Okay if direct broking is giving clients nearly a full allocation and asb is only 50% then what gives?

Is it because direct only had fewer people wanting genesis so were easliy able to fill there aplications and the opposite at asb?
or was more shares given to institutions over mum and dads at brokers?
or was it everyone just wanted to hugly increase there purchase amounts for this ipo over the other pwer cos
did asb not get there allocation they wanted and direct did?
odd i must say what ya think

Seems

[Snoopy]

have you looked in the prospectus. Normally timetable is in he first 20 pages


I wonder how many people requested a prospectus from their broker but instead got sent an investment statement? The actual prospectus was difficult to find and I eventually found it here:

https://d.genesisenergyshares.govt.nz/prospectus/

There is a much fuller evaluation of risk in the real prospectus.

SNOOPY

[Snoopy]

There is a much fuller evaluation of risk in the real prospectus.


One point that doesn't seem to be sufficiently highlighted in the investment statement is what happens to the balance between customers and generation should Tiwai point reduce its consumption even further? Genesis has a take or pay gas contract with Kupe, the gas field they partly own. The need to buy gas when cheaper sources of generation were available has blighted the company in recent years, as it will in FY2014 and FY2015. Genesis make much of the fact that should they choose to, they can ramp up production at Huntly and service all their own customers for which they currently buy energy on the wholesale market.

But if Huntly has to close, and of all the power stations in NZ it is the most likely candidate for closure IMO that would throw the generation customer balance at Genesis completely out of whack. The Genesis customer base for electricity could then collapse overnight as rival energy customers control their own generation to force up wholesale prices to bring Genesis to its knees. I am thinking back here to what happened to Transalta in NZ when they ended up as a pure retailer against the Gentailers and got destroyed. I don't think things would get that bad at Genesis, but the company could be forced to suddenly have in size, which would do shareholders no good at all...

SNOOPY

[bull....]

From my exsperience ASB usually allocate on a first come basis.
ME thinks that some of there really big players got in too late, so ASB changed their rules so some of thier big players did not miss out completely.
Unforetunately this is the way some brokers play.

If that is the case whats the point par- taking in these broker firm offers if some are favoured over others ?

[couta1]

One point that doesn't seem to be sufficiently highlighted in the investment statement is what happens to the balance between customers and generation should Tiwai point reduce its consumption even further? Genesis has a take or pay gas contract with Kupe, the gas field they partly own. The need to buy gas when cheaper sources of generation were available has blighted the company in recent years, as it will in FY2014 and FY2015. Genesis make much of the fact that should they choose to, they can ramp up production at Huntly and service all their own customers for which they currently buy energy on the wholesale market.

But if Huntly has to close, and of all the power stations in NZ it is the most likely candidate for closure IMO that would throw the generation customer balance at Genesis completely out of whack. The Genesis customer base for electricity could then collapse overnight as rival energy customers control their own generation to force up wholesale prices to bring Genesis to its knees. I am thinking back here to what happened to Transalta in NZ when they ended up as a pure retailer against the Gentailers and got destroyed. I don't think things would get that bad at Genesis, but the company could be forced to suddenly have in size, which would do shareholders no good at all...

SNOOPY A whole lot of speculation here Snoopy:cool:

[Snow Leopard]

...But if Huntly has to close, and of all the power stations in NZ it is the most likely candidate for closure IMO...

SNOOPY

Why?

Best Wishes
Paper Tiger

[tosspot]

Quick question. Do you need to wait for 3 working days after selling your shares to pay for the IPO or can you sell the shares then apply straight away.

[bull....]

Im getting a little worried now about this heavy scaling from asb and lack of it from direct broking from comments ive read here why? we havnt seen this much scaling for the other ipo's so my biggest concern is have the institutuions been loaded up at the expense of the little fella if so where is the buying going to come from on listing if the institutions got the bulk of shares in the bookbuild.

[Joshuatree]

Maybe not for you bull if you're concerned; what are your motives here, a great D/Y or a stag and/or FOMO?

[Xerof]

Im getting a little worried now about this heavy scaling from asb and lack of it from direct broking from comments ive read here why? we havnt seen this much scaling for the other ipo's so my biggest concern is have the institutuions been loaded up at the expense of the little fella if so where is the buying going to come from on listing if the institutions got the bulk of shares in the bookbuild.

bull.... if they put in a low bid price, they would be heavily cut back - it could be as simple as that.

I don't see ASB as being a big player in the scheme of things - they are retail online primarily. DB have the backing and support of ANZ, so possibly carry a bit more weight when it comes to obtaining firm allocations.

You have to remember, the vast majority end up with the lead organisers and the top distribution channels, and in this particular case, I would think a lot of insto's would have been in for it, having been harshly scaled out of Meridian.

It is not an even playing field, thats for sure

[JimHickey]

"ASB Securities did contact a small group of clients (namely for our Margin Lending and Nominee Clients) to register their interest in the Broker Offer. We placed a bid for shares, and unfortunately this was severely scaled. I am sorry, but we are unable to accept any further interest in the Broker Offer."

[Xerof]

"ASB Securities did contact a small group of clients (namely for our Margin Lending and Nominee Clients) to register their interest in the Broker Offer. We placed a bid for shares, and unfortunately this was severely scaled. I am sorry, but we are unable to accept any further interest in the Broker Offer."

Jim. this seems to back up my thoughts one post ago. I presume you have spoken with Victoria Ready?

[JimHickey]

Yeah. Id say that they were wanting more fees than other brokers, hence the smaller allocation

[Xerof]

Smaller broker bidders are best to be a price taker, get a fair amount, even if scaled, and be happy with the brokerage fee, rather than try to finesse the pricing

tsk tsk

I haven't heard from my broker yet, so I just sent him this

5642

[warthog]

Im getting a little worried now about this heavy scaling from asb and lack of it from direct broking from comments ive read here why? we havnt seen this much scaling for the other ipo's so my biggest concern is have the institutuions been loaded up at the expense of the little fella if so where is the buying going to come from on listing if the institutions got the bulk of shares in the bookbuild.

You didn't buy the Key/English line that this is about looking after kiwi mums and dads did you? All that garbage about not looking after the big boys, level playing fields and associated jibber-jabber.

[baywatch]

Forbar scaled back my allocation 60%

[couta1]

Forbar scaled back my allocation 60%
Looks like DB was the pick of the bunch for those of us that applied through them

[Grimy]

I've been allocated 55% of the top end of what I wanted, but admittedly gave my broker a range, so can't really complain, and on the upside, if the price does head south after listing I've got some cash ready to go.

[Balance]

Smaller broker bidders are best to be a price taker, get a fair amount, even if scaled, and be happy with the brokerage fee, rather than try to finesse the pricing

tsk tsk

I haven't heard from my broker yet, so I just sent him this

5642

Brokers will be looking after the overseas and institutional clients who were burnt by MRP.

That is the nature of things - a disgrace but reality.

[Xerof]

Agree with what you are saying Balance, but the disussion was about the small end of town brokers

[milt1968]

If buying just through the Genesis website (no broker) what are the chances of getting all shares applied for?

[percy]

Slim...
With brokers advising clients to go for more shares through the public pool,and the issue getting positive media coverage,demand will greatly exceed supply.

[couta1]

If buying just through the Genesis website (no broker) what are the chances of getting all shares applied for?
Zero unless you only want $1000 worth

[milt1968]

So not first in first served? Had 10000 lined up. Apparently it will take 3 days to process and debit funds from my CMA account

[macduffy]

Never has been.

Depending on how much your broker values your business, so goes the extent to which your "allocation" will be met. A matter of demand exceeding supply and brokers needing to allocate shares to (their) best advantage.

:mellow:

[Harvey Specter]

"ASB Securities did contact a small group of clients (namely for our Margin Lending and Nominee Clients) to register their interest in the Broker Offer. We placed a bid for shares, and unfortunately this was severely scaled. I am sorry, but we are unable to accept any further interest in the Broker Offer."i got the same message, even though I am one of those customers (though not a big investor) with no instructions on how a nominee account person applies.

Shocking customer service - they didn't even read my email - just send out the pro forma reply that didn't apply to me.

[milt1968]

Looks like I have received all 12500 I applied for - through the Genesis website. They have debited full amount from my account.

[couta1]

Looks like I have received all 12500 I applied for - through the Genesis website. They have debited full amount from my account.
Doesn't mean you have received all 12500 it is still subject to a 20% max scaling due to oversubscription,you will get a refund for difference in due course if scaled(which it will be)

[percy]

Looks like I have received all 12500 I applied for - through the Genesis website. They have debited full amount from my account.

It is usual practice for them to take the full amount of money you applied for.
Then they scale ,then refund the difference.

[couta1]

How about that Percy double posts at exactly the same time:cool:

[milt1968]

Ok - thanks for the info.

[Yossarian]

So peeps,
1. what's the best strategy for the public pool then ? Just apply for the max ?
2. what is the best bet on the % of that that I will actually get. So if I apply for the max - that's 30k shares I think - what will I likely end up with?
cheers
Andrew

[percy]

So peeps,
1. what's the best strategy for the public pool then ? Just apply for the max ?
2. what is the best bet on the % of that that I will actually get. So if I apply for the max - that's 30k shares I think - what will I likely end up with?
cheers
Andrew
This is given in good faith as I would not have a clue.!
Apply for as much as you can afford to front with.30,000 shares will mean you put up $46,500.
Expect to get 20 to 25% ie $11,625 worth.
Offcourse you will be refunded the difference.

[couta1]

For those who have firm allocations through a broker the max they can be scaled is 20% so on the above example you couldn't get less than $37200 worth,public pool is a lucky dip as nothing is firm except $1000 worth

[Harvey Specter]

Given this is the last of the Govt IPO, I would really love them to come out and say, we've changed our minds, we will be favouring the public pool over the institutional pool. Public pool wont be scaled and the intitutional pool will be scaled as required.

Vote winning sh!t that. ;)

[biker]

For those who have firm allocations through a broker the max they can be scaled is 20% so on the above example you couldn't get less than $37200 worth,public pool is a lucky dip as nothing is firm except $1000 worth
Not sure what you mean here couta. My broker is indicating possibly a 70% scaling. Should know today. And I am a valued (or should be) client

[couta1]

Not sure what you mean here couta. My broker is indicating possibly a 70% scaling. Should know today. And I am a valued (or should be) client
Not sure where your broker gets that 70% figure from,maybe he hasn't got you a firm allocation,the max scaling that can apply to a firm allocation is 20% quoting from the DB website and confirmed by phone ie the crown can only apply a max scaling of 20% to broker firm ,firm allocations,cheers

[Harvey Specter]

Also for smaller desired holdings, i.e. up to $10k (my sort) the DB guy said his best guess is that you would get the majority of that allocation, maybe a smallish 10 - 20% scaling at most. It was only the bigger boys $100k + that would start to see more significant scaling. All just his opinion and best guess, but something to go off maybe.That would be consistant with the previous two IPO's. With MRP, 80% of retail got what they wanted and with MEL, 95% of retail got 90% of what they wanted.

Expect there to be a limit where you get everything you want with a progressive scaling after that so the big boys cant use the public pool to top up their broker pool allocations.

[milt1968]

Is it possible to apply again through public pool?

I have applied for 12500 so I will most likely only get 2500?

So can I re apply with another 12500 shares and get another 2500 and be scaled again?

[gazprom1]

I had a good result with DB. Think I got my full allocation - 35,400 shares.

Now only need the IPO be a success.

Good luck to all investors.

Gaz

[bull....]

[QUOTE=Harvey Specter;470933]That would be consistant with the previous two IPO's. With MRP, 80% of retail got what they wanted and with MEL, 95% of retail got 90% of what they wanted.

yea that doesnt seem to apply this time as retail seem to being scaled big time, so my point being who is getting all the shares?

[milt1968]

Hey Gaz,

How do you know that you possibly received your full allocation? Did you receive some kind of confirmation through DB?

[couta1]

Is it possible to apply again through public pool?

I have applied for 12500 so I will most likely only get 2500?

So can I re apply with another 12500 shares and get another 2500 and be scaled again?
Your wife/Girlfriend/Partner/Other family member can but you cant

[bull....]

For those who have firm allocations through a broker the max they can be scaled is 20% so on the above example you couldn't get less than $37200 worth,public pool is a lucky dip as nothing is firm except $1000 worth

If thats the case how can ASB be scaling 50%?

[milt1968]

Thanks couta1, will look into it.

Anyone have any idea on when I will receive confirmation of the number of shares I have been allocated? Will I need to wait until the allotment date?

[couta1]

If thats the case how can ASB be scaling 50%?
Don't know you'd have to ask them,sounds like a few people unhappy with their allocations from ASB compared to DB where we can only be scaled to a max 20% as stated in writing

[Harvey Specter]

If thats the case how can ASB be scaling 50%?There is internal scaling and external scaling. Brokers have been allocated shares and they can allocate them as they see fit - ASB are saying they are 50% scaled. The allocation they get can now be scaled by 20%.

DB appears to have taken a different approach and only allocated those that it has, not needing to scale internally so they are only subject to the external 20 scaling.

[gazprom1]

Gidday

I rang them and asked how many shares they allocated to me. I had a firm order with them.

Cheers

[bull....]

There is internal scaling and external scaling. Brokers have been allocated shares and they can allocate them as they see fit - ASB are saying they are 50% scaled. The allocation they get can now be scaled by 20%.

DB appears to have taken a different approach and only allocated those that it has, not needing to scale internally so they are only subject to the external 20 scaling.

thx sort of helps explain it

[bull....]

The confusion over scaling looks to be another financial industry / govt FAIL!

Yes it has caused me a lot of frustration, you spend a lot of time researching these IPO,s so you can make a purchase of shares to the qty your analysis says is appropriate.
( For my style of investing I need a minimum amount of shares to make it worthwhile cause im sacraficing other opportunities for the investment )

So I have to weigh up. is knowing a definite quantity of shares I can purchase from an existing investment better than hoping I can get a required qty of shares in an IPO

[Harvey Specter]

Yes it has caused me a lot of frustration, you spend a lot of time researching these IPO,s so you can make a purchase of shares to the qty your analysis says is appropriate.
( For my style of investing I need a minimum amount of shares to make it worthwhile cause im sacraficing other opportunities for the investment )

So I have to weigh up. is knowing a definite quantity of shares I can purchase from an existing investment better than hoping I can get a required qty of shares in an IPOThen you should get a firm allocation from your broker. If you have issues with the scaling they do, then your issue is with them.

The perils of not being a big time player.

Note: I am small time.

[bull....]

Then you should get a firm allocation from your broker. If you have issues with the scaling they do, then your issue is with them.

The perils of not being a big time player.

Note: I am small time.

Actually I was invited to participate in the broker firm offer, my frustration is with the process not the broker

[Harvey Specter]

Actually I was invited to participate in the broker firm offer, my frustration is with the process not the brokerI'm confused. I thought a firm allocation is what you want. So why did you not take it up? They would give you an allocation which would be subject to a maximum 20% by the Govt.

[biker]

Not sure where your broker gets that 70% figure from,maybe he hasn't got you a firm allocation,the max scaling that can apply to a firm allocation is 20% quoting from the DB website and confirmed by phone ie the crown can only apply a max scaling of 20% to broker firm ,firm allocations,cheersBroker Firm Offer:
New*Zealand
Applicants who
are offered a firm
allocation by an NZX
Firm or a selected
trading bank
The minimum
Application
amount is
$1,000. Your
broker will
inform you
of your firm
allocation.
It will be a matter for the NZX Firm or selected
trading bank to decide how they make allocations
amongst their eligible retail clients and whether your
Application will be scaled back.
If the Crown exercises its right to scale back Broker
Firm Offer allocations following the close of the
General Offer, retail client Applications under
the Broker Firm Offer will be scaled back at the
Crown’s discretion. There is no minimum guaranteed
allocation under the Broker Firm Offer. Accordingly,
final individual allocations under the Broker Firm
Offer may be lower than the minimum Application
amount of $1,000.

[Master98]

Broker Firm Offer:
New*Zealand
Applicants who
are offered a firm
allocation by an NZX
Firm or a selected
trading bank
The minimum
Application
amount is
$1,000. Your
broker will
inform you
of your firm
allocation.
It will be a matter for the NZX Firm or selected
trading bank to decide how they make allocations
amongst their eligible retail clients and whether your
Application will be scaled back.
If the Crown exercises its right to scale back Broker
Firm Offer allocations following the close of the
General Offer, retail client Applications under
the Broker Firm Offer will be scaled back at the
Crown’s discretion. There is no minimum guaranteed
allocation under the Broker Firm Offer. Accordingly,
final individual allocations under the Broker Firm
Offer may be lower than the minimum Application
amount of $1,000.

do make sense.

[biker]

do make sense.
Do or Does ? Its taken from the investment statement.

[biker]

So if the Mums and Dads ask for heaps then they might be scaled back less than those going through brokers?

If so, then that's an Election bribe I like! :)

But the broker firm allocations can only be scaled back by a maximum of 20%.

This is how I understand it.

1. Everyone told their broker how many they wanted.
2. Broker aggregated these and applied for and got an allocation
3.Broker allocated these (at their discretion) to individual clients as a firm allocation. ( which was in some cases, 30% or less than what was asked for)
4. After the general offer closes, the government may scale this firm allocation by a maximum of 20%

[Harvey Specter]

But the broker firm allocations can only be scaled back by a maximum of 20%.Per that quote from the prospectus a few posts up, there is no 20% limit.

[Kagrok]

I've also read the 20% scaling by govt from ANZ page on the genesis IPO.


The Crown will be retaining the right to scale back applications in the Broker Firm Offer on a fixed percentage basis, by up to 20%. Scaling of Broker Firm Offer applications, if required, will be determined after the issue closes but before listing.

From http://www.anzshareandbondtrading.co.nz/dynamic/issuedetail.aspx?id=362, 4th paragraph, section 4.

[biker]

Per that quote from the prospectus a few posts up, there is no 20% limit.

I was advised of the 20% limit by my broker

[Yossarian]

interesting, just searched the Investment Stmt and Prospectus and there is no mention of the 20% limit - surely this would have to be disclosed? Maybe that was 'indicative' and the brokers are touting it as factual ?

[goldfish]

Well i got nothing, i applied the other day through DB website click on banner and say how much you want etc didnt hear anything back so rang them and they said i should have applied on the phone as they arent giving out any if you didnt ring and ask. What a crock that is, why have it online to apply if they going to ignore it. Have probably spent couple of thousand in brokers fees with DB over the year and this is what they do.

[Snoopy]

Snoopy wrote".But if Huntly has to close, and of all the power stations in NZ it is the most likely candidate for closure IMO..."

Why?



A fair question PT. I need to explain some more background here to give a full answer.

'Huntly' is probably better described as 'a collection of power stations operating on one site' rather than 'a power station'. Originally Huntly consisted of four what is termed "Rankine Units" rated at 250MW each and can operate on natural gas or coal. These were commissioned over the 1982 to 1985 period. As of today only two of these original units are operational. Number four has been fully decommissioned. Number three was put into storage at the end of 2013.

In 2007 what is termed 'Unit 5' a 400MW unit was commissioned at Huntly. This is a combined gas cycle gas turbine that only runs on natural gas. There is also a much smaller 50.8MW 'Unit 6' commissioned in 2004 that runs on gas and diesel.

There are two other gas powered stations well sited to serve the Auckland market. These are "Otahuhu B", commissioned in 1999 and owned by Contact Energy, with a total generating capacity of 380MW and "Southdown", commissioned in 1996 and owned by Mighty River Power with a total generatinng capacity of 175MW.

When I said "if Huntly had to close", I more correctly should have said "If part of Huntly had to close", because as I said before Huntly is really 2 1/2 power stations on the one site. The bit I was referring to that might have to close are the two older Rankine units. I believe this is likely because one of them has already closed and another is in storage. Also they are by far the oldest of the thermal power stations remaining in the upper North Island. So simply from a wear and tear perspective it makes sense to me that these two would be most likely to shut down first because:

1/ They have done the most work.
2/ They have the oldest technology, are not as efficient as 'Unit 5' and probably not as efficient as "Otahuhu B" or "Southdown" either.

Furthermore on the demand side, while Genesis has 26.8% of the NZ electricity market (p16 investment statement) they only have 19% of the Auckland market. Their relatively low market share in the largest market (Auckland) leads me to belive that they would still be able to supply all of their customers (they claim unit 5 alone and the hydro can do this already) and don't really need an old inefficent power generator (the rankine units) as backup when the overall market is well supplied with power.

SNOOPY

[Harvey Specter]

But they also have a take or pay on gas so even if more expensive, the marginal cost of that electricity may be cheaper???

[Snoopy]

But they also have a take or pay on gas so even if more expensive, the marginal cost of that electricity may be cheaper???


The take or pay contract from Kupe is a double edged sword for Genesis. The contract secures more than enough gas to keep running Unit 5 at Huntly, and presumably gives certainty to Genesis on the cost of that gas. (According to the investment statement, Genesis actually has so much gas under contract it is negatively affecting their profitability.)

But it also means that in times of low power prices, the margins at Genesis will be squeezed as the marginal cost of producing incrementally more substitutable renewable hydro energy is close to zero. With low power demand and increasing supply (both Mighty River and Contact have brought new geothermal stations on line over the last year) gas and coal fired thermal stations are looking very unattractive over the medium term.

SNOOPY

[macduffy]

Re the Huntly stations, the Woodward Partners research paper has a particularly good evaluation of their place in the NZ power generating scene. In fact, I found their research to be the most comprehensive and useful of the multitude of words written on this subject in recent days!

Disc: Not employed by Woodward Partners!

[Joshuatree]

Agree Unit 5 is what Huntly is all about these days.

As for the rest I'm confident Pink Floyd will reform and the power station(with unit 5 hidden behind) with its magnificent "colonial chimneys" will be an ideal album cover. Suggested album title is "sheepies":)

[biker]

I was advised of the 20% limit by my broker

Who was in turn advised by the Government

[Snoopy]

Re the Huntly stations, the Woodward Partners research paper has a particularly good evaluation of their place in the NZ power generating scene. In fact, I found their research to be the most comprehensive and useful of the multitude of words written on this subject in recent days!

Disc: Not employed by Woodward Partners!

From p7 of the Woodward report

"Market expectation has been that Genesis will retire its two remaining active Rankine units over the next few
years, however this will ultimately depend on market conditions including how the Tiwai Point situation unfolds and
the willingness of other retailers to contract dry year reserve hedge cover to support their continued availability."

SNOOPY

[skid]

Well i got nothing, i applied the other day through DB website click on banner and say how much you want etc didnt hear anything back so rang them and they said i should have applied on the phone as they arent giving out any if you didnt ring and ask. What a crock that is, why have it online to apply if they going to ignore it. Have probably spent couple of thousand in brokers fees with DB over the year and this is what they do.


Did you fill out the expression of interest form?

[psychic]

Rats, I'm probably the same then skid. Clicked the banner on DB site, indicated how much. I received an email yesterday telling me they'd send out the offer docs but also provided a link to downloaded the application form. Will call then tomorrow for sure

[percy]

I have been notified of my allocation by Craigs.I have received 38.75% of what I ordered.
My firm [firmish] allocation has been just about halved.
Wife received the same.
We are now "well positioned!"

[Snow Leopard]

...When I said "if Huntly had to close", I more correctly should have said "If part of Huntly had to close"...

That is better. A world of difference between closing Huntly completely and retiring the old units.

For those of you interested in the NZ electricity market you can get a snapshot here at:

http://www.electricityinfo.co.nz/

and

http://www.em6live.co.nz/ (prettier)

Best Wishes
Paper Tiger

[troyvdh]

dear Tumeric you are 100 % correct..cheers

[fish]

That is better. A world of difference between closing Huntly completely and retiring the old units.

For those of you interested in the NZ electricity market you can get a snapshot here at:

http://www.electricityinfo.co.nz/

and

http://www.em6live.co.nz/ (prettier)

Best Wishes
Paper Tiger

thanks paper tiger for the prettier site link
EAsy to see where most electricity is being generated.

[MrAT]

So has ASB run out of shares to allocate? I applied on Monday, they still haven't contacted me or taken my money...

[Hmm]

I applied through ASB on Sunday, they took my all money out yesterday but haven't contacted me with my allocation yet.

[Pump]

So is there any reason not to apply on the last day of the general share offer, if this means that one may be able to secure more funds to make a larger order?

Also, I called ASB yesterday and they told me they had no more shares to allocate.

[MrAT]

Looks like I am going to have to go through the general pool then ha...

[vorno]

So is there any reason not to apply on the last day of the general share offer, if this means that one may be able to secure more funds to make a larger order?

Also, I called ASB yesterday and they told me they had no more shares to allocate.

So does this mean when applying through the "general pool" do we leave our "Financial adviser" as blank/no instead of ASB Securities?

[couta1]

So does this mean when applying through the "general pool" do we leave our "Financial adviser" as blank/no instead of ASB Securities?
Yes that's the one

[psychic]

Damn well going to put a big red line thru DB stamp on my applic given the way they dealt with their allocation.
Highly brassed off

[couta1]

Damn well going to put a big red line thru DB stamp on my applic given the way they dealt with their allocation.
Highly brassed off
Just apply online forget about paperwork.

[iceman]

Damn well going to put a big red line thru DB stamp on my applic given the way they dealt with their allocation.
Highly brassed off

Same situation here psychic. Sent them a strongly worded email this morning but not sure they will even read it. A very poor process indeed.

[glennj]

Well I had a different experience to some of you. Direct/ASB Emailed me on the the 31st notifying me of the firm allocation allotted which was only slightly less than what I applied for. ( subject to scaling to a max of 20% )

[Harvey Specter]

Well I had a different experience to some of you. Direct/ASB Emailed me on the the 31st notifying me of the firm allocation allotted which was only slightly less than what I applied for. ( subject to scaling to a max of 20% )Show off. You must be one of the BSD that they love. :)

[G on]

I have just gone through the public pool application. 1 joint name, 2 my name. It was going to be just one but I read my email after the fact where apparently the fastsaver a/c can't be used for direct debit so I applied again using another a/c. Checked this morning and the money has been taken out of all a/c's! $2000.00 each time so will be interesting to see what I get.

[Xerof]

It will be - unfortunately, it's shoot first, ask questions later, i.e. have your money now, then cross check CSN, addresses etc to cull out multiples/budgies/cats and dogs

let us know what happens!!

[mp52]

So does this mean when applying through the "general pool" do we leave our "Financial adviser" as blank/no instead of ASB Securities?

Hang on - is it the case that applying though the public pool and identifying that I do have a broker (DB :mad ;:) will take me out of the Public Pool allocation and pass me to DB where the larder is empty? Wonder if I can amend the order and remove the broker reference?

[couta1]

Hang on - is it the case that applying though the public pool and identifying that I I've have a broker (DB :mad ;:) will take me out of the Public Pool allocation and pass me to DB where the larder is empty? Wonder if I can amend the order and remove the broker reference?
Have you already sent your order in ? If not just do it online and tick the box No Broker which is what ive done as also have order in with DB,cheers

[Harvey Specter]

Hang on - is it the case that applying though the public pool and identifying that I do have a broker (DB :mad ;:) will take me out of the Public Pool allocation and pass me to DB where the larder is empty? Wonder if I can amend the order and remove the broker reference?
NO. THe broker reference on the public pool applicaton is just so that they can claim commission of the govt.

[traineeinvestor]

After getting scaled back in the firm allocation (only 1/3 of what I asked for), I applied to the public pool as well. Given that brokers have a degree of discretion when it comes to allocating shares in offers generally, I deliberately routed the application form and old fashioned cheque through my broker. It's a gesture that costs me nothing (except a tiny fraction of a cent as a taxpayer) but may (or may not) be remembered by the broker at some point in the future. Some possible upside and no downside is the way I see it.

[airedale]

I believe that out of the 49% for sale, 40% have been allocated to instos and the lead brokers. So that just leaves 9% for the rest of us including the mommas and the poppas.

[Harvey Specter]

So that just leaves 9% for the rest of us including the mommas and the poppas.The average retail investor only invests about $10k

The IPO is raising $736m, so the 9% will allow 13,518 M&D investors to apply.

MRP attracted a total of 113,000 individual investors and the Meridian Energy float attracted just 62,000 investors.

So is 13,500 allocations for M&D investors enough?