2 Aug 2013

Z Energy opens public share offer

7:38 pm on 2 August 2013

The initial public offer of shares in petrol station network Z Energy has opened on Friday.

Owners - the New Zealand Superannuation Fund and infrastructure investor Infratil - are seeking to raise between $650 million and $900 million by reducing their stake in the business to between 40% and 50%.

Shares in Z Energy are being offered at between $3.25 and $3.75 each.

The offer is not open to the public, and retailer investors wanting to grab a slice of the petrol retailer will have to buy them through a participating broking firm.

A broker at the Kapiti-based Chris Lee and Partners, Edward Lee, says Z Energy has a strong brand presence, with more service stations in New Zealand than any of its competitors.

He says they also sell more fuel per station than the industry average, and have increased their non-fuel margins by upgrading the quality of the food and coffee they sell and changing to hotel-style bathrooms.

Z has increased its fuel margin by 4.5 cents to 16.5 cents per litre, and plans to invest another $50 million over the next five years to improve services and build more stores.

Mr Lee says oil prices and the exchange rate are ongoing risks for Z Energy, but he is confident it will continue to grow while offering yields of between 8% and 9% a year.