Restricting overseas ownership in state-owned enterprises being floated by the Government from later this year is causing some fund managers to question the attractiveness of the deals to investors.
Russell Investments' quarterly survey of fund managers in April found strong support for the float.
However, opinion differed on the impact of the Government's proposed cap on overseas ownership of the 49% share it would sell in individual SOEs to just 10% to 15% of the total shares on offer.
The indifference by several managers might be because foreign ownership of New Zealand companies was typically around 15%, Russell New Zealand head of consulting Daniel Mussett said.
"With the majority of demand also likely to be local, it was also thought that the initial impact of the restriction on overseas ownership would also be muted."
Significantly, more than 40% of surveyed fund managers believed the restriction worsened the investment case, as liquidity would be reduced and prices would be lower than without the restriction, he said.
One fund manager said foreign investors were expected to be the main price-makers so too few foreign investors participating would indicate a cheap investment.
Mr Mussett said if that were the case, then any restriction might act as an anchor on prices, a situation that would prevent New Zealanders from maximising their returns from investments in the SOEs.
The Government plans to sell up to 49% of its shareholdings in energy producers Meridian Energy, Genesis and Mighty River Power and coal producer Solid Energy. It will also reduce its stake in Air New Zealand.
Mighty River Power is expected to be partially listed on the NZX later this year, with the others to be listed before the next election in 2014.
